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A secured loan is a form of borrowing where you use an asset as security against the money you’ve borrowed. With an asset used as security, you become much less of a risk to the lender, meaning you have a much better chance of securing a loan. They are a common option when it comes to borrowing large amounts of money over a loan period, such as five years. However, with a secured loan comes the risk of losing your assets, so it’s vital to know what you’re getting into first.
How do secured loans work?
Just as with any other type of loan, you will agree on monthly repayments to pay back the loan, with interest included. Typically, the interest rate will be calculated as a percentage of the amount you owe. This could be on a fixed, variable or fixed variable rate, depending on the loan you agree with your lender.
As with any type of borrowing there is always a level of risk involved for the lender, either when lending to a company, or an individual. Lenders want to know that their money has the best possible chance of being paid back and if not, that they will be able to recoup the majority of the loan.
What happens if I miss payments?
If you default on a secured loan, depending on the original agreement you made with them, legally they have the right to take your assets. This could potentially mean foreclosing on your property, or repossessing any vehicles.
However, some lenders won’t jump to any quick decisions. If you communicate well with your lender, they will look at your circumstances and see what the best course to take is, this could mean paying a late fine. If you can prove to the lender that it was simply a merely and you can continue to make payments, they may not immediately look to try and repossess your assets.
A default against a secured loan can also negatively affect your credit rating and score. Repossessions and foreclosures will remain on your credit score for up to seven years, however, they do slowly diminish over time.
Advantages of a secured loan
- Because your loan is secured against an asset, you are generally able to borrow more than with a non-secured loan.
- The loans can be stretched out for a longer period, making it the monthly affordable amounts more manageable.
- Even if you’re credit score is not perfect, or you have very little credit history, securing a secured loan tends to be easier as your asset acts as collateral.
What type of lenders give secured loans?
Almost all lenders whether big or small will offer secured loans covering a variety of different options. The monthly repayment costs, lifespan of the loan and interest rates will be totally dependent on what kind of agreement you can reach with your lender. All of the top blue-chip funders will offer secured loans.
What can we do for you?
If you think a secured loan would aid your business, either with cashflow troubles, or growing and progressing as a company, it’s vital you get the most appropriate deal. The correct type of secured loan can help provide you with that critical injection of cash, either to aid a tricky period, or to take your business to the next level.
We can help you get the best secured loan deal for your business, tailored to fit the needs of your business. We are brilliantly positioned to negotiate the right deal for you, working closely with the top blue-chip lenders, we can get exclusive rates and deals that otherwise would be unattainable.
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Why Choose Us?
WF Financial Solutions is an independent broker of invoice, asset and trade financing solutions with links to lenders of all sizes and specialties. WF Financial Solutions has helped many clients through the range of lenders and their varying services and are proud to offer advisory and introductory services to finance providers that suit your needs.