Secured Loan: Understand How It WorksOn December 16, 2019 by Ethelyn Murphy
Have you met refinancing? Understand more about the details of this secured loan and get the best rates on the market now.
Refinancing property and vehicle almost everyone knows. But under another name, secured loan. This line of loan is when you borrow money to buy car, motorcycle, home or apê. But what about refinancing these assets, do you know how it works? Learn it!
Make a coffee makeover, get out of debt, take the kids to Disney
Everyone has a dream they really want to realize. When the money is short for it to come true, a loan can be the solution to catch up, plan, and finally get the plans off the ground! (Or at least get out of suffocation).
In addition to personal credit – which is super practical and does not ask for collateral – anyone looking for a loan can count on several other options, including refinancing a property or vehicle. Available only to those who have these assets paid off (or about to be paid off) in their own name, they have the advantage of higher leasing credits, lower interest rates and often longer terms to pay.
Sounds advantageous, doesn’t it? And indeed it can be! But to do so, you need to know how you are working on how long the secured loan works, to whom it is usually released, and in which situations it is best suited.
What is real estate or vehicle refinancing?
The term may sound strange, but in practice refinancing is simple to understand. The secured loan works like this: by applying for this type of loan, instead of just giving your word in signing the contract. Thus you leave a property or vehicle as a guarantee of payment. For this very reason, another name for refinancing is secured loan.
From the signing of the contract, your property is in the name of the bank or financial institution with which you took the credit. But calm down! Only temporarily, until you make the loan amount. Until then, you can stay at home and use your car as normal. Just be careful not to delay and make the payment of installments on time.
Why is the secured loan often advantageous?
Imagine that, on a fine day, an acquaintance comes to you and borrows money. You have known each other for some time, and he has never given reason to distrust him, yet he always beats the fear of defaulting, doesn’t he?
Now imagine that this same acquaintance borrows money, but instead of just promising to pay on time, he leaves something of financial or affective value in his hands. You may even find it exaggerated and not accept. But you’re likely to be much more confident lending money, right? With banks and financial institutions is the same thing!
Although always do a credit analysis before lending any amount. The most sure these companies are that you will make the payment on time, the more money they are willing to lend. In addition, they are less inclined to charge high interest to cover possible defaults from customers.
For this reason, while in the personal loan interest rates are usually around 6%, in refinancing, they start from 1.14% per month. Ah! And the borrowed values are usually higher: you can get up to 70% of the value of the vehicle and up to 60% of the market price of the property.
Who can apply for a secured home or vehicle loan?
The first prerequisite for availing this type of credit is to have a property or vehicle paid off in your name. But it is wrong to think that, in the case of real estate, only residential houses or apartments are accepted. Next, check which properties can go to the contract:
- Residential Real Estate
- Rooms and Commercial Buildings
- Land in urban area, provided that within residential condominium
It is important to note that, to be used as collateral, the property must be up to date with all documentation, including property tax and condominium. The same goes for vehicle refinancing! As long as it is paid off (or nearly paid off) on your behalf, it can be for personal or business use, and ideally it is fine and IPVA paid.
Remember that even having something as collateral, the bank or financial institution will still do a credit analysis, but those who are negative also have a chance to be approved.
To whom and in what situations is the secured loan recommended?
One of the biggest advantages of secured loan is that with it, you do not have to give satisfaction of what you want to do with money other than vehicle financing.
By releasing a high amount at friendly interest rates, the secured loan can be a good way to invest in large projects. This is the case, for example, who wants to start a new business or dreams of renovating the house.
Vehicle refinancing, on the other hand, is often a way out to get a buck at low interest rates and pay off debt.
Regardless of what you decide to do, the fact is: secured loan is only worth it for those who are sure they will be able to repay. That’s because, from 3 late installments, the bank or financial institution can now start the process to take good of you. So be very careful! Before signing a contract, compare offers on Astro Finance and only sign the one that fits right in your pocket.
- Payday loan consolidation near me -Payday loan help debt consolidation: learn more
- Which banks make personal loans?
- By refinancing and consolidating loans, you can reduce your monthly installment by up to 50%
- Repayment rate and debt restructuring.
- Building loan – interest and conditions in comparison.