subject: Putting It On The Line: Secured Bad Credit Loans [print this page] Many borrowers, when faced with the necessity of taking out a bad credit loan, find the idea of an unsecured loan to be a problem. For some, it is the fact that there is no fallback if the loan is defaulted upon, while for others it is a problem of unsecured loans having a ceiling on the amount that can be borrowed. For such people, there do exist creditors that will extend a secured bad credit loan, though these are less common than unsecured lenders.
A secured bad credit loan offers several advantages over unsecured loans. For one, secured bad credit loans are taken out against owned property. These loans, if defaulted upon, may result in the seizure of said property, but will not result in such circumstances as bankruptcy. While some may prefer unsecured loans, and the risks that come with them to the idea of losing their property, others would rather that the dangers of the loan be offset to their holdings rather than themselves. The second advantage is that a secured bad credit loan has a much higher limit on the amount that can be borrowed, because the maximum amount is usually 125% of the value of the securing property, which generally results in a considerable sum, making them perfect for those who need a great deal of money very quickly.
Another aspect of secured bad credit loans is that being secured against a personal holding means that the creditors can offer more favorable terms. The creditor has insurance to fall back on in that it can seize the securing property if things go bad, and this insurance means that the bank doesn't have to worry as much about recouping expenses. Because of this, interest rates on secured loans are generally lower, and repayment parameters generally have more slack built into them. If a borrower has property to borrow against, and can stand the idea of risking that property, a secured bad credit loan can be a much better option than its unsecured equivalent.
