Secured Loans and Borrowers’ Leverage

The tumultuous economy

The nature of financial markets is such that generally, people who need loans the most usually have the most difficulty securing a loan. The economic conditions that exist are forcing the tightening of lending criteria, and many people are left without a resource for obtaining a loan. However, if you are a homeowner, you may be in a position to take out a secured loan.

Secured loans are loans backed by an asset that is provided as security, or collateral by the borrower. In most cases this asset is your home or real estate. Secured loans often are the preferred method for homeowners who wish to borrow a large sum of money and stretch out repayment plans over a longer period of time.

Why secured loans?

These types of loans are used for many purposes, including debt consolidation, major home improvement expenses or major medical expenses. If you own a home and have a measure of equity in your home, a secured loan may well be the answer to your financial concern.

When applying for a secured loan, it is imperative that you are realistic about your financial status. It is far better to lengthen the term of your loan and be able to make your payments on time, than to shorten the loan term and have trouble making your payments. Late fees and delinquent payments can cost you dearly over the course of your loan. Remember, you are securing your loan with your home. Failure to make your payments on time may result in foreclosure proceedings.

Shop around, compare rates

Owning a home and seeking a secured loan, you are automatically in a position of leverage. It is essential that you compare secured loans and shop for the the terms and conditions. While many secured loan lenders will make you feel as if they are in the position of leverage, remember they are not.

While they have something that you may need or require, that being a secured loan, you also possess something that they need and require. You are a borrower, with an asset, who is willing to risk their asset for the purposes of borrowing money. Without you as a customer there is no business for secured loans.

Be strong

All too often people who pursue loans pursue them from a position of weakness and that should not be the case. If you are unable to negotiate with a particular lender over the terms and conditions of your loan, simply find another lender. Missing out on a loan is similar to missing a bus. There will always be another bus available, as will lenders willing to make secured loans.

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