A Quick Guide to Cheap Loans Secured

Are you thinking of getting a loan? Don’t do so without doing your homework.

As you probably know, applying for a loan (and getting approved) can be a complicated and taxing process. It’s not something that you can play by ear. You absolutely need to know what you’re getting into so you don’t find yourself in trouble months or years from now.

Below, you’ll find a quick guide on secured loans, which is one of the major types of loans that you can consider if you need funding for a business or any other important purpose. This will help you make sound decisions.

What is a Secured Loan?

Otherwise known as the second mortgage or second charge, a secured loan is what you take on after your first mortgage, and is secured against a property. People apply for secured loans for various purposes. Some use it to renovate or improve their homes, some use it to open and finance a new business, some use it to consolidate loans, and others spend it on their vacation.

Who Can Apply?

Anyone who owns a property that has enough equity to cover the amount of money being borrowed is eligible to apply for this type of loan. However, if the property is owned by two or more people, the application should be filed by both or all owners.

Benefits and Risks

The secured loan is typically much cheaper than the unsecured loan, which is another type of loan that is not secured against a property. Since there is no safety net for the lender, higher rates are imposed for those taking on unsecured loans. If you want a cheaper loan, the secured option is more ideal for you.

Not only that, a secured loan is also easier to apply for. A higher credit rating and more documents are required for unsecured loans. People usually find it easier to get approval for secured loan applications.

But this does not mean that this loan does not come without any risk. Because it is secured against a property, there is the possibility that you may lose your house or car if you are unable to make the required repayments. The lender or the bank is legally allowed to repossess your property to offset the losses.

Properties that can be Used as Collateral

Collateral refers to a property that serves as security for payment. It is to be forfeited or repossessed by the lender in the event of payment default. To put it simply, if you are not able to pay off your debt, the lender will take the property that you used to secure the loan. It acts as an “insurance policy” for the lender in case things go awry for the borrower.

Here are some of the types of properties that can be used as security.

Real Estate

This is the most commonly used security for loans. This is why, if you are going to file an application for a loan, the lender will ask you to list down all the real estate properties that you own. If you own only one home, the risk is bigger. You might end up losing a place to live in if something goes wrong and you are unable to continue paying off the loan.

Savings Account

Many people do not know this is possible but you can actually secure a loan using a savings account. Even if you do have cash in your bank that’s enough to cover the loan, you might consider the possibility of taking out a loan due to good terms and other reasons. This loan, which is known as the cash secured loan, is low risk for the lender. This means that you are likely to get lower rates, better terms and easier process of application.


If you’re taking out a loan to finances the purchase of inventory for your business, then you can also secure the loan using the inventory. This is another commonly used collateral. However, most lenders do not prefer this method as they do not have anything to do with the inventory that you’re purchasing. Don’t expect to get a good deal if you use this as security.


Business owners may also opt to secure their loans using the equipment that they are going to purchase using the money that they are borrowing. As with the inventory, the lender won’t be too excited if you use this as security, as they do not have any use for your business equipment in case you default on payment.

Taking out a secured loan is an easy way to get the necessary funding. However, always remember the risks involved and what needs to be done so you don’t end up losing your home or any other important property that you have.