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The Advantages of Collateral Loans

by Educaton
The Advantages of Collateral Loans

Collateral loans are the kind of guaranteed loans that will solve your problems if you urgently need a large amount of money. Whatever your reason is it is an immediate answer for serious financial needs. This is usually done by businessmen who have a need for a large amount of money; like, of building a business, solving business problems, pursuing studies and other serious matters that need the urgent action of a big amount of money.

What is Collateral Loans?

Collateral Loans are also regarded as secured loans. This kind of loan takes place when a borrower pledges his/her assets such as car, and house or land property. The asset of the borrower serves as collateral; if the borrower might not be able to pay the loan then the creditor will take the collateral as payment.

Around 14th to 15th century in Italy, collateral loans had emerged for the very first time and ever since then, collateral loans had been the most preferred loan done by many people. This is much better with the unsecured loans whereas, the collateral loan will assure the lender that they won’t lose all their money.

What Assets can you use for Collateral?

  • Real estates
  • Automobiles
  • Cash accounts
  • Insurance policies
  • Investments
  • Valuables and collectibles

Why Choose Collateral Loans?

1. Safe – Unlike other loans such as, unsecured loans, the collateral loans are way much better, implying that you have the ability to pay the debt with the collateral as your basis. Indeed, it is bad to hear if you had undergone an unsecured loan and then you can’t pay the debt. Whereas, you can’t assure your self what the debtor can do unto you if you can’t pay the debt of an unsecured loan.

2. Fast – If you immediately need a big amount of money, then collateral loans is perfect for you. In a very short amount of time, you can grab the money right away provided that you have an asset for collateral. In addition, if you have a poor or bad credit history the lenders will not take this as many basis as long as, you provide an asset for collateral you can surely apply for this loan instantly.

3. Convenient – In this kind of loan, you will be able to have better interest rate. Unlike the unsecured loans, collateral loans have significantly lower interest. This kind of loan is convenient and advantageous to the borrower; because, he can apply for a bigger amount at a low interest rate. This is a kind of loan that is easily approve because the lender have the confidence that if that borrower will not be able to pay he will get the collateral as payment.  In fact, you can easily apply for a loan like this because almost all of the banks in the world offer collateral loans.

In some ways, the burden may heavily fall on the borrower’s side for the fact that the lender offers a lesser value of your pledged asset. There are some cases some assets will be heavily discounted. In that way, the lenders will be able to get all their money in case of loan default. This is some kind of taking a part in the process; lenders take a risk and so as you. Even though, as what had been said, with all the stated benefits and reasons above you won’t surely regret applying for collateral loans.

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