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You Don’t Need the Dragon’s Den for a Cheap Secured Loan

With the credit crunch seemingly set to continue into the New Year, growing numbers of consumers could turn to secured loans to acquire the credit they need to service their debt or make home improvements or finance their car. Like the top business minds on the BBC show Dragon’s Den who found this week that they had offered £100,000 to a couple who had both been declared bankrupt after owing £1.5 million, lenders are now requiring more assurances that their money isn’t being borrowed by those with a poor credit history.

At the moment many people looking to borrow money from banks, get a new credit card or organise IVAs are being turned down as banks are shunning those who they deem to be high risk. Secured loans are more likely to be approved though since the loans are taken out by offering some security to the lender – using the value of one’s property as collateral. Other advantages of secured loans over unsecured loans or credit cards include the higher amounts that can be borrowed, lower interest rates, smaller monthly repayments over a longer time, and a better chance of those with bad credit ratings being approved.

Due to the ongoing credit crisis, many consumers are avoiding unsecured loans and choosing homeowner loans instead. As a more affordable way to get funds, the terms and conditions associated with these loans are more flexible. They can be taken out for any reason but the most popular according to Steven Baillie, head of loans at Sainsbury's Bank, are debt consolidation, home improvements, and car finance. It can reduce your number of creditors, spread out the cost of repayments, and buy you more time as well as money. Money taken out for home improvement is a shrewd investment as it will add even more worth to the property. The best way to get a cheap personal secured loan is to shop around for advice and the best interest rates.

Loan News posted on 30 November 2007

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