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Secured loans maybe easier and faster to obtain than many other loans
but there are a number of potential dangers with getting secured loans. If you are in need of a loan
but are unsure if a secured loan is the right way to go
then this article can help you. Knowing more about secured loans and their dangers will help you to decide if secured loans are the sensible option.

What are secured loans?

Secured loans are loans that are granted because you put up some form of security behind the credit
usually in the form of your house. Amounts usually range from between ฃ3000 and ฃ50000
and repayment terms range from 3 to 25 years. The amount that you can borrow and the interest you pay will depend on how much equity you have in your property
which is the amount you have already paid towards your property’s value.

Are there any advantages?

There are many advantages to secured loans. One such advantage is that you can have the loan approved much more easily than other loans
especially if you have poor credit. This is because you are providing the lender with security in the form of your property should you not be able to make repayments. Secured loans also allow you to borrow more money over a longer period of time than you would be able to do with unsecured personal loans. If you know that you can make the repayments
then a secured loan will give you more favourable terms
which is always the aim when taking out any form of credit.

So what are the problems?

Despite their advantages
there are also many dangers with secured loans
most notably the danger of losing your home. If you cannot repay the loan
then the lender can recover the loan amount through the sale of your property. Although you may be able to make the repayments right now
if you become unemployed or your income decreases
then you may end up with serious financial problems. If you can
it may be better to get an unsecured loan
credit card or remortgage than to secure credit against your property. Financially overstretching yourself will lead problems
so it is important that you think carefully before taking out a secured loan.

Are they worth it?

Knowing whether or not you should get a secured loan really depends upon your situation. Secured loans are most suitable for debt consolidation or for making home improvements. They are also the best source of finance for people with poor credit. However
in most cases secured loans should only be used as a last resort
and other types of loans should be reviewed first to see if they could meet your needs. Whatever your situation
you should think carefully about your ability to repay the loan. If you do this
then using a secured loan will be much less problematic and will give you the credit that you need.