What is a Secured Personal Loan?
Secured personal loans are given to people who need to borrow money and have something to offer as collateral. Collateral can be anything, including financial assets, stocks, bonds, savings accounts and certificates of deposit. Or it may be real property, such as a car, motorcycle or other piece of personal property.
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Function
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The purpose of a secured personal loan is to allow you to purchase real property. The item you purchase with the money (or the item you offered as collateral) can be taken by the lender if you fail to make payments.
Types
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While personal loans can be obtained through banks or other lending institutions, they can also be found through title lien companies who offer loans on the title of your car or other vehicle or through pawn shops that hold your item and sell it if you fail to come back and make payments.
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Size
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Depending on the item you are putting up for collateral, it may be as small as $20 or as large as $5,000 or more. Pawn shops may even offer loans of several dollars.
Time Frame
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The amount of time you have to pay the loan back will vary on the lender and the amount of money you borrow. Pawn shops may only give you several weeks while a bank will give up to 5 years, depending on the amount of borrow and the collateral you offer. As a general rule, the length of the loan will be longer than that of an unsecured loan.
Benefits
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The interest rate of a secured loan is normally lower than that of an unsecured loan because the lender knows that he has the ability to claim the collateral to pay the amount owed if you default on payments.
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