In the past, people used to laugh at people who took out secured bad credit loans. Today, they are quickly becoming more common, which is good. Here are seven good reasons why it's a good idea right now.
There is a lot of money being given out these days, and consumers are finding that their credit references are being kept track of more and more often. This is a good thing because it makes banks less likely to lend money in the same way and gives everyone who wants a bigger market access to a wider range of lending options.
Banks aren't the be-all and end-all, then. Banks want to keep as much security as they can, so they can pick and choose which customers to give secured bad credit loans to. But using a "one size fits all" approach is definitely bad news for most people, since we are all different. Consumers can go somewhere else if they know that financial institutions can be so picky. So, in the long run, the rules of the market have given us more options when it comes to secured loans for people with bad credit.
Secured loans are usually less expensive than unsecured loans, sometimes by a lot. This is because of how dangerous it is. If the loan amount is tied to the borrower's property, the loan provider knows that the borrower has to work harder to keep a roof over his or her head. Because of this, the cost of borrowing through a secured loan is usually a little bit lower. Simply put, the APR number for loans with secured credit will be lower. This is easy to see on any advertisement for a loan.
Longer repayment periods. Paired with the fact that the loan amount will be cheaper, the loan repayment period can usually be set for a longer time, which makes the monthly payments a little lower (although economies of shorter borrowing times should also be factored in).
Individual care. Even though a secured loan may take longer and have more steps, borrowers are more likely to get a personal touch than with an unsecured loan, where the application process is usually as boring and faceless as filling out an application form. Most people who borrow money would rather be seen as real people than as numbers or prospects.
How many secured loans are out there. As well as traditional secured bad credit loans that can be used for most things, there are now also plans for different kinds of loans. There are now a lot of non-status loans, loans to pay off debt, and personal and business cash advances. If the property your loan is backed by is unusual, you may also be able to make special arrangements. For example, brick and tile is the most common way to build a house, but you can find specific plans if your house is made of concrete, wood, or even has a slate roof.
Today, more things are taken into account. Because of changes in how financial risk is managed and assessed, loan providers are now willing to consider secured bad credit loans, which was not the case in the past. With the new attitude toward self-certification, people who work for themselves aren't punished as much as they used to be. People who work for themselves no longer have to have their books checked for the past three years. People with defaults, CCJs, IVAs, and even discharged bankruptcies are now often taken into account in the ever-changing world of finance. People, especially those with an entrepreneurial spirit, are taking bigger financial risks all the time. Because it has to, the market is changing to account for bad credit loans.