Getting Approved For UK Secured Loans
If you’ve ever obtained a loan or have considered doing so, you’ve probably heard of secured loans. These types of loans are secured with collateral, hence the name. You’ll be required to sign over property or some other type of asset as security for the loan. If you default (are unable to repay the loan or are late making payments) on the loan, the lender will be allowed to take full ownership of it. If you are interested in a secured loan and would like more information about how to get accepted for one, you’re in luck. That’s exactly what we will be discussing in this post.
The most important aspects of a secured loan are the terms, the rate and the amount of money you are allowed to borrow. Each of these things is dependent upon how much the item you’re using as collateral is worth, your credit history, your income and subsequent ability to repay the loan. The more money you earn and the less debt you have, the better the rates and terms you will receive. However, unlike unsecured loans, lenders of secured loans are willing to take more of a risk when it comes to the aforementioned because if they aren’t repaid, they will take ownership of whatever assets were used to secure the loan.
The first step in obtaining a secured loan is identifying a lender. This can be done easily enough. You’ll probably want to check with local banks and lenders first, though online lenders are an option as well. The internet is a great place to find all-of-the-above.
Next, gather all of the appropriate financial records. These may vary depending on what bank or lender you’re working with. Give them a call before visiting. It’ll save everyone time if you don’t have to reschedule your appointment because you don’t have the right documents. If you are attempting to work with an online lender, you’ll have a few options. Give them a call, send an email or IM them about what documents you’ll need to include with your application. This information might already be posted on their website so look carefully before contacting them. Again, while the documents you’ll need may vary from lender to lender, expect to at least show proof of income and information about the asset you’re going to use for collateral. You may not need to have the actual item on hand but you’ll need to provide proof of ownership.
It’s important to note that whatever item you use for collateral is at least, equal in value to the amount of the loan. For example, you won’t be able to use your flat as collateral for a 3 million pound loan if it’s not worth that much. Therefore, before applying for a loan, determine how much you want to borrow and whether or not you have assets at least, equal in value. If at some point, it is determined that the value of your property is less than the loan, a deficiency judgment may be filed against you.
Make sure that whatever property you plan on using to secure the loan is something that you can afford to lose. If you forfeit on the loan (are late making payments or fail to repay the loan), the lender will take possession of it.