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Secured Loans Comparison Guide

There are literally hundreds of providers of secured loans and it is important to compare what each is offering before agreeing to anything. Some of the top factors to consider and compare when taking out this type of loan are listed below.

1. The Amount you are Allowed to Borrow
Before the credit crunch started to impact the lending market most lenders would gladly offer a credit agreement to home owners for 90-95% of their property value. Today however you’ll be lucky to secure a home owner loan for more than 75% of the value of your property. Some lenders will go higher than this however they will also expect you to have an impeccable credit history and a relatively low mortgage, if any at all. Decide how much you need to borrow before trying to narrow the field and it will make the eligible lenders easier to compare.

2. The Overall Length of the Repayment Period
In the case of secured loans the longer the repayment period the better. This is because secured loans are generally for relatively large amounts and paying over 15-20 years means the monthly repayments are always affordable. Paying over a greater number of years also allows you to borrow extra cash to pay off unsecured debts such as credit cards and any overdrafts associated with your bank accounts. If you feel you can afford higher repayments though then opt for a shorter repayment period. This will save you money in the long run as you’ll only pay interest on the debt for a shorter period.

3. The Loan Company’s Fees
There are numerous fees that come with a secured loan including valuation fees for your pledged security i.e. your property, set-up fees and administration fees. These all need to be compared as they vary greatly from lender to lender and can add thousands to the amount you pay back over the terms of the loan. You should also look at the lender’s early repayment fee if they charge one, just in case you manage to pay the debt off before the finance agreement officially finishes.

4. The Interest Rate of the Secured Loan
The rate of interest being charged on a secured loan will be one of the main deciding factors for most people. Interest rates on this type of loan tend to be lower than on the same size unsecured loan however they still vary quite widely between lenders. People with a bad credit history or county court judgements might find they are quoted a higher rate of interest because of the additional risk. A few companies refuse to lend to individuals with low credit scoring even if they have adequate equity in their property. This means that you may need to look around for a decent deal and a comparison website is the ideal tool for this.

With these factors in mind, it is important to carefully read the terms and conditions of each secured loan you’re interested in. Make a note of the fees they charge and the period of grace you get before proceedings start to repossess your property. Look at all the pros and cons before making a decision and if you have any doubt about your ability to pay the repayments in the long term then try to raise the money you need from another source.