How Secured Loan Are Profitable For Nowadays Conditions?

Most of us may have borrowed some money in the form of loan from banks, financial institutions or even some privately operating persons. Have you ever paid attention to the type of loan borrowed by you? There are different types of loans. Secured loans are also among one of the most important loans. Now one may wonder what a secured loan is. A secured loan refers to a loan that is borrowed by pledging some asset such as car or property as security or guarantee for the loan. The asset thus pledged serves as a secured debt unpaid to the creditor providing the loan. There are certain benefits or pros associated with secured loans as mentioned below.


Payment of monthly instalments in small amounts- It is one of the chief advantages of borrowing a secured loan. It implies when a person borrows secured loan then he/she can repay the monthly instalments in small amounts. The payments are divided into smaller amounts that can be easily paid by the borrower. Also the period of repayment is extended for long time period this way. All this is possible due to assurance to the lender that he will surely get his money back. In case, the borrower is unable to repay the money due to certain reasons then the asset pledged by the debtor is compensated in lieu of money. Hence it is convenient and beneficial for both the parties.

Fixed rates of interests- In case of secured loans, the rate of interest charged upon the principal amount is fixed in the very beginning. It means the debtor knows well about the total amount of monthly instalments he/she has to pay. It helps the debtor to arrange for monthly payments accordingly in a convenient way. Also it rules out any chances of conflict among the two parties due to fluctuation of rates of interest in the financial world.

Use of debited money without any restrictions It is also one among the major advantages of getting a secured loan. The debtor may use the money for any purpose provided it is legal. It means the money borrowed through secured loans can be used for any purposes that may be personal or commercial or any other reasons. It means the debtors are at liberty and benefit of getting secured loans for wide range of needs.

Complete financial security for creditorsIt is worth noting that secured loans are beneficial for creditors as well. It is because the creditors are assured of getting their money back in all the circumstances. On top of that, they also gain profits by getting extra interest upon each monthly payment. In case, the borrower is unable to repay the money within specified time period, the creditor may sell off the pledged assets to get back his money. It provides complete financial security to the creditors also.

These are some of the major and most important benefits of secured loans. These loans are quite helpful for the borrowers. Also these are equally useful for the creditors as well.

So if you get money in an emergency condition you will trust on secured loans because it furnishes you an easy way to lend money on security.

About Author: The content idea suggested by Mauneel Desai, an expert financial adviser working in financial industry for more than a decade.

Kevin Kholi

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