Secured Loans And The Option Of Debt Settlement
A secured loan is a loan attached to an asset, such as property or a home. If you’re unable to pay the debt, the lender can apply to the courts to take possession of the attached asset in order to sell it to get their money back.
Lenders have security of your property. Because of this, they may offer much lower interest rates than on other types of lending, or they may lend to people with a poor credit history who wouldn’t get an unsecured personal loan. You may also find that you can borrow more through a secured loan than you can through a personal loan
You may have seen commercials for secured loans on TV. These commercials are often advertised as debt consolidation loans, a way to put all your existing debts into one loan. All of this might sound appealing, but it comes at a very high risk.
What does a ‘secured’ loan mean?
A secured loan is a loan attached to your home or a property you own. If you’re unable to pay the loan debt, the lender can apply to the courts and force you to sell your home, car, or other asset to get their money back.
Find out more about car repossession.
How does a secured loan work?
The lender will make an offer based on the fact that they have the right to repossess and sell your property if you fail to make repayments. Because these lenders have security of your property, they may offer much lower interest rates than other types of lending options offer. They may also lend to people with a bad credit history who would find it more difficult to get an affordable unsecured personal loan. You may also find that you can borrow more through a secured loan than you can through a personal loan.
Can you pay off a secured loan early?
It depends on the agreement. You should make sure you fully understand the terms of the loan before you sign the agreement. Sometimes there are penalties for paying off secured loans early. These are generally known as “early repayment charges”.
Secured loans and debt consolidation
Many secured loans are offered as a way to consolidate your existing debts. This is a benefit because the interest rates are often lower than unsecured personal loans. This is because the risk to the lender is reduced when the loan is attached to an asset.
The lower interest rates for a secured loan can make them seem like a good option for debt consolidation, however if your situation changes and you can’t afford to pay the loan, the creditor could take action to repossess your property. It is always a good idea to keep in mind that financial emergencies come up and can affect a borrower’s ability to keep up with the monthly payments. Take for example a cut in pay or the loss of a job all together.
If you’re considering consolidating your debts it could also be a sign that you’re finding it difficult to pay your existing debts. In this case we’d recommend getting expert debt advice on your available options before securing a debt to any of your assets.
We can help
Because of the risks associated with debt consolidation, it is advisable to research other debt relief options such as debt settlement. Debt settlement does not have a loan attached to pay off all of your debts. This is a benefit because you will not have to worry about paying off another loan. Instead, debt settlement requires that you make affordable monthly payments into a special savings account each month. Once a good amount of savings has been established, the debt settlement firm will contact your creditors and collectors on your behalf, in an attempt to negotiate a settlement amount for less than the amount that you owe. If you’re struggling to pay your debts, CuraDebt is here to help you. We can provide expert debt advice to find a better way to deal with your debts. Our free debt advice is tailored to your personal situation. Contact us today if you think that debt settlement is right for you. 1-877-850-3328