What you must know about Secured Loans

1. All loans are secured loans.

False
Financing can either be secured or unsecured. Secured means that a borrower must pledge some type of collateral, or asset with value in the case of default in repayment on the loan, the lender can liquidate the asses and be reimbursed. The most typical type of collateral is one's home, stocks or bonds.


2. Banks can repossess your property for failure to pay on secured loans.

True
Receiving secured funds can have a disadvantage to those who are not able to pay. When taking out secured funds there is a risk of losing personal property if the borrower cannot make the payments. Before choosing secured financing, make sure that you will definitely be able to meet the minimum monthly payments.


3. Secured loans typically offer more flexibility.

True
They can provide more flexible underwriting and longer loan periods than unsecured loans. Secured financing typically carries a lower interest rate. Secured financing offers a lower risk which means that banks can pass on some of their savings on insurance to the borrower by offering better interest rates.


4. Secured loan borrowers can expect only a small loan.

False
Funding is calculated according to property value which is usually much higher than lenders are willing to offer on an unsecured loan. Those with adverse credit histories can be approved. Getting several loan quotes will help the borrower to get the maximum amount they need.


5. Secured loans are not mentioned in the Bible.

False
2 Kings 4:1 - Now there cried a certain woman of the wives of the sons of the prophets unto Elisha, saying, Thy servant my husband is dead; and thou knowest that thy servant did fear the LORD: and the creditor is come to take unto him my two sons to be bondmen.