Reminders in Borrowing a Secured Loan

May 16, 2012 by  Filed under: Loans 

Since the term suggests, a secured loan is usually a form of financing that is guaranteed with the submission of collateral. The collateral can be a home or other valuable asset that matches the cost of the loan. By pledging collateral, the lender is given assurance that if ever the borrower defaults payments, an available resource can be used to pay the remaining debt.

Secured personal loans give borrowers with bad credit history or low credit rating the ability to acquire the financial aid they want despite imperfect credit. However, consumers have to take most of the necessary precautions before acquiring this kind of loan.

Are you currently likely to apply for a secured loan or low credit score loan sooner? If so, here I will discuss important reminders you should not forget:

Understand the risks. Before obtaining a secured loan, you need to be well aware of the potential risks and you must do everything in your capacity to prevent it from happening. Bear in mind that if you do not submit your monthly loan payment in time, your lender can immediately start the foreclosure process. This is exactly why it’s extremely important to generate a repayment plan to ensure that you will never miss a particular payment date.

It’s also advisable to discover what you could do when you are confronted by the possibility of foreclosure. What exactly are your alternatives and just how could you stop the foreclosure process? Being aware of the possible consequences and being prepared is much better than being surprised.

Negotiate to obtain a better term. Since you also will likely be providing security in exchange on your loan, you should never hesitate to ask for a lesser rate and simpler repayment terms. You should not simply accept the primary loan deal given to you. Instead, study the choices, compare offers from a minimum of three lending companies, and be prepared to negotiate.

Look at the fine print. Just like any type of loan, it’s very important to take the time to read the complete Terms and Conditions. If you might find statements within the contract that aren’t clear, do not hesitate to look for legal advice from an attorney. You have to be certain that all terms in your contract are legal and fair. Since your home is at stake, you should not sign a contract which you have not completely read and understood.

Never be late. Some lending companies will be sending the foreclosure notice once the borrower misses three consecutive monthly payments. Would this mean you should never worry about occasionally late payments? When you feel you will be late in submitting your monthly payment due to an emergency, you should call your lender straight away to inform them regarding the situation.

You should not delay until it’s the second or third non-payment before talking to your lender. You should not delay until your lender sends you a foreclosure notice. Do not forget that it’s going to be more complicated for one to convince a lender to never proceed when the foreclosure process begins. Take your payment obligations seriously.

Shelly Evans is a freelance writer and loan consultant. The website offers resources that specialize in providing bad credit personal loan and bad credit cards to people with bad credit.

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