Collateral Against Cash For A Secured Personal Loan

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Collateral Against Cash For A Secured Personal Loan

There are many different values of loan that can be taken out today through a lender on the market. For the higher sums of money you would most likely have to consider a secured personal loan. If you are looking for a sum between $10,000 and $25,000 you will need to offer the lender a form of security against the money you borrow. This is what is known as collateral, and can come in many different forms.

Various Forms Of Collateral For A Loan

When it comes to collateral for a secured personal loan, there are many options. If you require a large sum, you will need to offer a large form of collateral to meet the value of the money you are borrowing. The common rule of thumb is, the collateral must meet or exceed the cost of the loan in order to be accepted by the lender. If you are a homeowner and do not have any liens on your property, you can use your home as the collateral to secure the loan. The lender will ask that you relinquish your deed to the property, and the lender will hold on to it until the loan is repaid.

If you do not repay the loan the lender has the legal right to take possession of the property and sell it in order to retrieve lost funds in the transaction. This is what is considered a foreclosure, and there is no legal leg to stand on from this point on. There are lenders out there that will accept other forms of collateral, provided they meet the lenders criteria. Some of these include: cars, boats, antiques, art, and coin collections. Again, the value of the collateral must meet or exceed the cost of the loan. In the case of smaller items, the lender may in fact ask to hold onto them until the loan is repaid.

Lower Interest Rates Through The Use Of Collateral

When applying for a secured personal loan you will notice that the rates will be lower than that of an unsecured loan. This is due to the fact that you are using collateral as a form of security on the money you borrow. The lender can offer you better rates for these loans, as they are protected and safer for the lender in general. The more valuable the collateral, the better the rate should be. It is always best to shop around for the best rates, prior to committing to a lender. This will allow you to view many possibilities, and find the one that fits your current financial situation.

While the rates are in fact governed by an industry standard, this is not to say that all rates are the same. Taking the time to shop, along with the value of your collateral, will go a long way in finding the lowest rate. A secured personal loan is not for everyone. If you are not in a position to secure the loan you are looking for to the lender's satisfaction, you may have to try another alternative and look elsewhere.

About The Author:

Bill Stone writes for Direct Online Loans who help homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

Article Source: http://EzineArticles.com/?expert=Bill_Stone

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