Secured Loan
Secured loans are a type of loan that requires you to provide assets as collateral. These could include your home, car or other property. This is often an easier way for those with no credit or who wish to build their credit history, as a viable option.
One major advantage of secured loans is that lenders are less likely to lose money if you default on your loan. Furthermore, secured loans usually feature lower interest rates than unsecured ones.
The primary drawback to a secured loan is that if you fail to make payments on time, the lender has the right to seize and sell off assets pledged as collateral in order to recoup what is owed. In some cases, repossession of these items may remain on your credit report for up to seven years.
Another disadvantage of secured homeowner loans is that they typically take longer to process than unsecured ones. The intricacies of valuing a borrower’s assets also makes the approval process more time consuming.
If you are having difficulty repaying your secured loan, speak with your lender about a possible modification. This could include changing up the repayment plan, deferring part of it or reducing how much is due each month.