Secured Bad Credit Loans Are Becoming The Norm
By Gordon Goodfellow
Secured bad credit loans used to be looked upon with some derision in years gone by. Now they are becoming the norm, and we should be glad. Here are seven good reasons why we should all cheer up about it!
1. There is so much credit being offered and people are increasingly finding that credit references are being recorded as a matter of course. This should be taken as a good thing as it leads away from conventional lending by the banks and opens up a more diversified lending system for all of us which covers a much wider market.
2. Banks are therefore not the only source. Banks like to have as much security as possible, so they can afford to pick and choose whom they lend to. But having a 'one size fits all’ approach is definitely not good news for the majority of us, because we are all different. Knowing that banks can be this choosy means that we are free to go elsewhere. So in the long run the laws of the market have provided us with a greater variety of sources when it comes to secured adverse or bad credit loans.
3. Secured loans are usually cheaper – sometimes much cheaper – than unsecured loans. This is because of the risk aspect. If a lender knows that the loan amount is tied into the borrower’s property then he knows that the borrower has an extra commitment to keep a roof over his or her head. Therefore the cost of borrowing through a secured loan is going to be significantly less for that reason. Simply, the APR figure will be lower. This can be seen clearly on any loan advertising material.
4. Longer repayment periods. Hand in hand with the fact that the loan will be cheaper, the repayment period can usually be set longer and so the monthly repayments will be significantly reduced for that reason (although economies of shorter borrowing times should also be taken into account).
5. Personal service. While the secured loan will involve more procedures and will usually take longer, you are likely to get a more personal service than with an unsecured loan, where the application process is often as anodyne and faceless as one simple application form. Most consumers like to be treated as real people than just numbers or prospects.
6. The diversity of secured loans available. As well as conventional secured loans for any purpose, specialist plans for different types of loan have also grown up. Non-status loans, debt consolidation loans, and both personal and business advances are examples. Special plans will usually also exist if the property your loan is secured on is in some way different. For example, brick
and tile is the preferred form of construction, but if your home is concrete based, or timber, or even has a thatched roof special plans are there if you seek them out.
7. More circumstances are considered. Improvements in financial risk management assessment have meant that lenders are prepared to consider secured bad credit loans where such a thing was not conceivable in the past. The self-employed, in particular, are not treated as they used to be, especially with the new attitude towards self-certification. Three years of audited accounts are no longer automatically required from those people who work for themselves. Defaulters, people with CCJs, IVAs and even discharged bankrupts are now regularly considered in today’s changing world of finance. Increasingly people take bigger financial risks, especially the entrepreneurial minded. The market is expanding to take account of that, because it has to.