Secured Loans - Benefiting the Borrowers in Manifold Ways

Posted in Finance, Loans by Erika Anaya on July 10th, 2007

The UK loan market was deregulated since 1982. But, after that came a flood of experimentations that has changed the whole scenario of the UK lending business. Now, it is the one of the most competitive markets in the world. The absence of state or state funded entities’ intervention has done remarkably well for the UK lending industry.

There, of course, are regulations and limits led by FISA and the Bank of England but this has not restricted the growth of the loan business. There are a variety of loan products in the UK loan market and the advertising strategies employed by the lenders to attract the customers have evolved drastically over the last century.

Previously, secured loans and mortgages were the major loan products in the UK loan market. But, with the increase in demand of loans for varied reasons, more loan products entered the market. The big revolution was unsecured loans that don’t require the borrower to pledge any asset as collateral. These loans attract the borrowers a lot since the risk associated with these loans is low. However, secured loans still have a foothold in the market, as they are the most cost-effective loans.

Secured loans attract lowest interest rates in the market. This is because the lenders feel assured by the asset like home at stake. So, if you want to earn benefits like low interest rates and flexible repayment options, apply for secured loans. Following are the different repayment modes a borrower can choose.

  • Fixed rate of interest- In this plan, the borrower pays a fixed rate of interest for a certain period during the initial term of the loan

  • Flexible rate of interest- In this plan, the interest rate offered to the customer fluctuates in accordance to the base rate, decided by the Bank of England. The interest rate is reviewed after every 6 months

  • Interest only- Under this repayment plan of secured loans, the customer would be paying only interest for the whole term of the loan. But, the borrower will be required to pay the outstanding principal amount at the end of the loan term

  • Partial interest and partial repayment- In this repayment plan, the borrower pays interest only for the initial specified term and after that covers both components - the interest as well as the monthly loan installment.

    • Secured loans are great borrowing options if you have security to offer. These loans can get you huge amounts for long repayment periods, making it easy for you to repay the loan.

    The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. She is currently assisting loans-park as a finance specialist and elaborating on secured loan. For more information please visit at http://www.loans-park.co.uk/

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