If you’re looking to take out a personal loan, to consolidate debt, finance a large purchase, or to cover unexpected expenses, it’s important to consider what type of loan is best suited to your financial situation. There are a variety of loans available for individuals, including secured personal loans. But what exactly is a secured personal loan, and is it the right choice for you?
What is a secured personal loan?
If you take out a secured personal loan you will need to provide collateral to secure the loan, such as real estate, a vehicle, or personal savings. This reduces the risk of default, and gives the lender confidence in you. However, if you don’t meet your loan repayments as outlined in the agreement, the lender has the right to seize your pledged asset to recover their losses. Despite this risk, there are some attractive benefits associated with taking out a secured personal loan.
Benefits of a secured personal loan
- Lower interest rates compared to unsecured loans, resulting in lower monthly payments and interest costs.
- Higher loan amounts, due to the collateral pledged.
- Individuals with imperfect credit histories may find it easier to qualify for a secured personal loan.
Is a secured personal loan right for you?
Secured personal loans can be a good option, but they do pose some risks to borrowers. Your mortgage broker can help you to assess whether taking out a secured personal loan with your real estate as collateral is a viable option for you.
Risks associated with secured personal loans
- Pledging your assets puts your valuables at risk, should you default on your loan agreement. You should be very confident in your ability to pay back the loan before taking out a secured personal loan.
- Failing to abide by your loan agreement will result in serious consequences for your credit score and financial health.
Talk to a mortgage broker about secured personal loans
Secured personal loans can be a good option for borrowers wanting a large loan; especially those that don’t have the best credit score. However, there are some risks involved in taking out a secured personal loan with your assets as collateral. It’s important to discuss whether a secured personal loan is a good fit for your situation with an experienced broker. Book an appointment with one of our Borro brokers today or call the team on 1300 1BORRO.
