Best Loan Secured

Even the worst credit rating will score you a loan when you have something of value to secure it with. Unlike unsecured loans, which are granted according to credit history and based entirely on an agreement to repay, secured loans are guaranteed by tangible assets that give lenders collateral against the loan amount in the event borrowers default. If you don’t repay the secured loan according to the terms and conditions of the agreement, you’ll forfeit the secured asset.

Secured loans are available in amounts from a few dollars to a few million dollars. The amount of the loan is based on the value of what you offer as collateral and on what the lender is willing to give you in return for a hold on your property. Interest rates and loan amounts can vary greatly among lenders.

You can visit a pawnshop and get an immediate secured loan in exchange for things like gold, musical instruments, and electronic items. If you don’t return with the loan amount plus interest in a predetermined amount of time, the pawnshop keeps your property and you aren’t liable for repayment. Pawnshops won’t check your credit history and loan money to almost anyone. The catch is that interest rates are high and the amount offered in exchange for your property is low.

The best secured loans are mortgages and auto loans. The lender pays for your house or car and retains the property deed or auto title. When you repay the loan, you’ll take possession of the deed or title. You can also obtain an attractive secured loan against equity in a piece of property. Known as a second mortgage, the amount you can offer as collateral is equal to the current market value of the property minus the outstanding balance. Although anyone can obtain a second mortgage, the terms of the loan will be affected by your credit score. The better your score, the lower the interest rate you’ll get.

A credit card that’s secured is an easy loan anyone can qualify for. Secured cards are guaranteed by cash. You deposit an amount equal to the desired credit limit into an interest-bearing account with the bank issuing the card. If you pay your balances in full every month, you won’t be charged interest on purchases and you can beef up your FICO score at the same time.

Stocks and bonds make excellent secured loan collateral, as do boats, planes, land, and rental properties. One of the easiest secured loans to obtain is a personal loan from a bank where you have a preexisting savings account or CD to use as collateral.

There are many advantages to secured loans. They are typically approved faster than unsecured loans and available to almost everyone. The interest rates are generally lower than would be charged for unsecured loans. You can borrow more money over a longer period of time. The only disadvantage is that, if you don’t repay the loan as agreed, you risk losing your collateral.