Secured Loans: Might Make you Feel Insecure

By: Henry Kruz

The term 'secured' when prefixed against loans is supposed to provide the customers a semblance of security. But actually this is a deal where the only person breathing easy is the lender! Secured loans are deals where your property (more often than not your house) is taken in as security by the lender in lieu of the money that you borrow to make your life easier or to avert any anticipated financial crisis.

More and more people choose secured loans because they then have to pay a lower interest rate on the amount borrowed but one also needs to remember that in case they are unable to pay the loans for reasons like bad health or un employment, then you will be running into troubled water. So before availing any secured loans in UK one should be very careful regarding the EMIs and the 'fine print'.

Also beware of the hidden costs as most loans are publicised as cheap secured loans but actually they are not! Generally the amount you pay for the insurance (optional) is not shown or added but the fact is if for reasons like bad health or sudden unemployment you are unable to pay your monthly instalments then this Payment Protection Insurance (PPI) comes to your rescue!

PPI covers your repayments in case of sickness, unemployment, accidents and under few policies the provision of full payment in case of death also exists! But it's not always feasible to club your PPI with the loan payment because the consolidated amount can be quite daunting so nowadays people are increasingly opting for standalone PPI policies that don't cost them as much. The standalone policy is a better option because lot of vendors or banks who provide you secured loan deals along with the PPI don't allow you to cancel your PPI and still keep your loan and those who do generally impose a penalty for doing so! Hence a standalone PPI to cover a secured loan is always a better idea.

In UK there are 100's of vendors providing cheap secured loan to homeowners and people with bad credit history also get secured loans without much ado. But it depends on the way how you handle the repayments and the monthly instalments that what will be the fate of your collateral/house. In the recent past repossessions are on the rise due to the in discreet nature of the people while taking a loan. It is a necessity nowadays but one should do proper planning and thinking before put his/her house on line just to bail out of a momentary financial crisis.

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