What is a Secured Personal Loan?

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A secured personal loan is a kind of loan where you need a form of collateral for the money that you are borrowing. The asset may be in the form of a house, a bond, your car, or the likes. When you have a bad credit history or you haven’t established your credit yet, this may be the only type of loan that you can apply for.

If in any case you own some stocks or bonds, you can use them as your pledge to the lending institution so they can take them in the occasion that you won’t be able to pay your debt.

One example of a secured personal loans is a car loan. Whenever you buy a car, you often have to give a down payment and the bank will finance your balance. Your new car is the thing which will serve as the collateral for your car loan.

It will secure your loan. If you can not pay your debt, the bank or your lending institution would repossess your car and sell it in order to get the payment for what you borrowed. If you are a business owner and you have some equipment in your business, you can use them as collateral to your loan too.

Basically, a secured refers to any kind of loan which must have assets equivalent or greater than the amount of the loan you want to secure so they can serve as collateral. With the economy as it is now, securing this kind of loan is sometimes the best way people can get a hold of extra funding.

The good thing about this kind of loan is it often has a lower interest rate since there are some things backing it up. Lenders are rather secured that whatever happens, they can get their money back.

2 Comments to “What is a Secured Personal Loan?”

September 20, 2011 at 9:24 am
Levi Herlitz says:

It’s a great deal! Nowadays, during economy downturn, some lenders even accept non-traditional collaterals. They accept jewelries and electronics. Just find them.
December 12, 2011 at 9:25 am
lojra falas says:

Great blog!! You should start many more. I love all the info provided. I will stay tuned