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What is a Secured Loan?

The Value of money today has far lesser value than it was 50 years ago. This is the reason why most people today would need more cash to be able to purchase expensive but necessary items such as a car or a house and lot. The amount of cash people earn or have in their savings today is usually not enough to pay for the major necessities needed to at least have a comfortable life. This is the reason why more and more people are applying for any type of loans from various financial institutions to be able to meet the necessities of their day to day activities.

Types of consumer credit and loans vary and they all come in various forms and conditions. The simplest is the promissory note which is normally transacted between friends, relatives and with small financial institutions such as a pawnshop. A more complex type of loan is usually provided by a loan company like a bank and other higher form of financial entities. These types provide higher loans that can amount to millions of dollars. However they carry payment terms and conditions that are stricter and more complex in nature. These loans are usually availed for the purpose of opening up a business, and/or purchasing properties such as a house and lot. Contracted loans are generally controlled by laws enacted by a country’s government where the lender and the borrower belong to. This is to legally protect both the lender and the borrower from any problems that may arise from their loan transaction. These laws are able to protect the borrower from abuses of the lender such as placing a very high interest rate on the loan while the lender on the other hand is protected from financial losses due to uncollected debts from the borrower.

Generally most types of financial loans fall under the category of Secured loans. Secured loans are loan amount secured against the borrower’s fixed assets. The asset secured for the loan will is referred to as “collateral”. The way it works is that in the event the borrower defaults on the loan, the lender will have the legal right to recover the rest of the unpaid loan by foreclosing on the borrowers collateral or secured assets. In most cases, secured loans can also be some kind of flexible loans because the interest rate placed on these kinds of money transactions are low and often negotiable. The Interest rates are usually close to the prime rate offered by most financial institutions and the payment terms and condition are very manageable to the extent that that the loan can be structured as “interest-only payment”. This means that the borrower can forego paying the principal amount for a period of time and is only required to pay the interest (usually) on a monthly basis. Car loans, High end recreational vehicle loans (such as boats, RVs, Aircrafts, etc.) mortgage loan, home equity loans and home equity lines of credit usually fall under the category of secured loans. Considering that this type of loan is fully secured, people who apply for this type of loan, have a good chance of getting their applications approved.

 

What are Financial Loans?

The lending of money from an individual, organization, financial institution to another entity or individual is a business activity referred to as a financial loan. Financial loans always come with a cost and this is usually referred to as the interest. The interest is in fact the incentive for a lender to provide a loan to a borrower. Proof of a financial loan is usually a written contract with loan conditions signed by both the borrower and the lender. The loan contract sometimes comes in the form of promissory note indicating the principal amount, the interest rate, and the mode of how the loan is to be paid. In a contracted loan, there are obligations and restrictions enforced by the loan contract where the borrower is placed under restrictions referred to as loan covenants. Business loans and other kinds of loan are provided by financial entities and more often than not by banking institutions. Type of loans available in the market today is Secured, Unsecured, Demand, Subsidized and Concessional loans. The general target markets for these loans are categorized into two namely, personal and commercial.

 

A secured loan is where a borrower pledges some kind of valuable asset like a car and/or other properties. The secured assets are called collaterals. A mortgage loan is one of the most common types of secured loan and this type normally falls under the category of personal loans. These are usually availed by private individuals to enable them to purchase items or things such as a car and/or house and lots. When a bank or other financial institutions provide a mortgage loan, they (the bank) are given security in the form of a “lien” (encumbrance) on the title of the property. This simply means that in the event the borrower fails to pay the full amount of the loan, the mortgaged property or properties will be turned over to the lender to be auctioned off or sell to recover the amount the lender has provided.

 

Unsecured loans on the other are never secured against any of the borrower’s asset and are usually provided by financial institutions (mostly banks) and comes in the form of a Credit Card, Personal loans usually referred to as character loan, bank overdrafts, credit lines, corporate bonds, and peer-to-peer lending. More often than not the interest rates for unsecured loans are much higher than those of secured loans.

 

Demand loans are short term loans and have no repayment fixed date and have floating interest rate. More importantly they can be called in for repayment at any given time. Subsidized loans incur very minimal interest because the same is reduced by an explicit or hidden subsidy. A good example is a student loan where the loan remains in effect as long as the student remains enrolled in education. Concessional loan or “soft loan” are the most generous of all loans because they have the least interest rates and the grace periods provided are a lot more flexible. The best examples are loans provided by international banks (like the World Bank) to developing countries. Another is loans offered by companies to their employees as a form of an employment benefit.

 

 

Know your bank services

Sometimes, people are hesitant when it comes to applying for a bank loan. They might feel that the bank application requires too much information and some of that information might be considered too personal and private by the applicant. Some people think that it is too personal because it concerns their credit and the loan applicant already knows that their credit rating is not very good. Remember, the application for a loan will usually request all types of personal information. If a person has excellent credit then there should be no problem with getting the loan approved.

Some people are not aware of the financial services that their bank provides. They might be familiar with the processing of checks on a daily basis because that is the service that they use most. They might not use the services of the notary public at the bank or those offered in the investment banking service area. Most people will not even know about a re-application because have not tried or applied for loans in a bank before.
Some people that ask for credit need the money, but there are instances where people who do not need get it just to have money on hand to use on another investment. For people who needs quick cash, the bank might tell them to visit the financial service centre that offers loans until their next payday.
Some loans that people apply for will be to finance a new home. The new home loans will often have low interest rates that a person can use to borrow money for a period of fifteen or thirty years. The home mortgage loans are one of the financial services that people choose to use when they visit the local branch of their bank.
Other financial services in the loan department of a bank, apply to refinancing a loan. The person that needs to refinance their home might want the money so that they can make improvements to the property such as a room addition or to enclose a garage or porch. The bank will offer rates that are competitive with other banking institutions and the person can deduct any interest on this type of financial service on their tax return.
Some loans that are approved by a bank will be for a short duration. People that have done business with their bank over the years have learned to realize that their bank is there to help them if they need cash. Since the banking member has a good history of repaying their loans on time, the bank is more likely to approve a signature loan for the individual in lieu of one that requires repaying it on time.

There are a lot of bank services that people didn’t know. You just need to ask your bank what are the other services that they can provide aside from their basic bank loan. They should be happy to tell you since they are going to gain profits if you finally decide to let them finance your specific needs.

Get the lowest possible rates in refinancing your old debt

There comes a time that some people cannot meet their financial obligations. Sometimes it’s really hard to cope up with some financial duties because of circumstances that we cannot avoid. By this, he borrower will find a way to still pay his debts to avoid issues with the lenders or lending companies.

Borrowing more money to pay old debt is referred to in finance” Refinance”. The common acts that many people turn to include “Peer Share, “one of the revolving capital loan, paying for credit card debt or get cash from credit card to pay for shares. This is only a short-term liquidity solution. In this case interest’s difference and payment due date of capital and interest no longer important. This is not a right mind-set for a long run financial health. It is found in many cases that refinance without profit can only increase more debt and makes life more difficult. However, refinance for people who shoulder home loan is important, especially during this time when the interest arises. The difference of interest affects instalment.
Practically, to refinance home loan is getting money from a new loan to pay off old debt: capital interest and various fees to redeem mortgaged security. This process should be arranged with the presence of a land officer. Then this mortgage security can be collateral for the new loan and the process of making the loan agreement should also be completed with the presence of a land officer.
All process stated above would be handled by the financial institution that gives you a new loan. Therefore, you don’t have to worry about the delay of the former financial institution that lent you money because the bank surely carefully calculates everything and do the agreement end of the agreement or redeem ahead of schedule, the bank receives full interest anyway. Additionally, if you don’t pay full money according to an agreement, the bank gets redemption’s fees ahead of schedule as the compensation of interest.
Before refinancing, legally, borrower should carefully read through an agreement made with the former financial institution, including checking all expenses of refinancing as well as talking to the former financial institution to decrease the interest. Surely no bank would want to lose their best customer to other banks. However, if a customer has a problem in repaying and liquidity, it’s impossible to negotiate for lower interest. Nevertheless, customers can refinance to better his liquidity and reduce his monthly repayment.
If customer could solve the problem of legal activity, the next process is all about figure the benefit refinancing will get directly and indirectly. If you are thinking about refinancing, please consider 5 basic factors: new interest rate, loan’s condition, expenses in making a new loan, cost of redemption prior to schedule and expenses to benefits comparison. Apart from these five factors, you should also consider other factors such as loan balance.

In the end, if it’s not really necessary, you should not refinance because of little lower interest rate from the bank, might not worth it. You can still try other options that the bank has to offer and ask how to get lowest loan rates.

Bank loan options

Sometimes, there are some unexpected expenses that we cannot avoid. Some from the bill that has been piling up, some from the emergency car problems, or some from emergency home repairs that needs a fast and quick action. No matter what the case, at times it becomes difficult to wait till the end of the month to meet the expenses.

 

And getting a cash advance until payday can sometimes pose quite a problem. Even though you can always ask your friends or relatives to give you a cash advance until payday, but this can uncomfortably, to say the least. In this case, you can either apply for bank loans or you can get no credit check payday loans. No credit check payday loans have been very popular over the years and offer numerous advantages over getting a bank loan or taking advance till payday from a friend or a relative. Here are two popular options that you can get from payday loans:

 

No credit check payday loans. Despite its popularity, there are many who don’t quite know what cash until payday loan really is. Simply put, a payday loan is an unsecured loan that is extended to you in order to meet instant cash needs. In the case of these loans, all you need to do is fill up an online application form that requires you to give certain personal information followed by information regarding your job and your employer. The basic prerequisite for these loans is that you need to be living locally within the area of the lender and should be over 18 years of age. Also, you should be a salaried employee. The approval process for no credit check payday loans is rather simple and the minute you get an approval, the cash is deposited directly into your account. As a result, it does not pose a problem to get an advance till payday to meet any emergencies.
A long term bank loan. In order to get a bank loan, usually, the approval process takes time. At the same time, the advantage with these loans is that you do not need to pay back the cash immediately. But looking at it from another perspective, this also implies that you end up paying higher fees and a higher interest than you would pay for an instant payday advance. And if you need the cash instantly, it does not help to take a long term loan. With a long drawn approval process, it would take time to get the money from these loans. As a result, if you need the cash to meet immediate expenses, these loans would be of no help. Also, in most cases when you apply for a long term loan, you would need to present relevant collateral.
Finally, before you decide to apply for a payday loan or a long term loan from a bank, consider the advantages and the limitations of both before finally taking a decision. You need to analyze which one is the best fit for your needs and will also make things easier for you to meet your obligations.