Getting a Loan Secured by an Asset A secured loan is backed by some assets as to lower the risk assumed by the financial institution. The lender may forfeit the asset if the borrower is unable to make the required monthly payments. This type of credit usually has a lower rate of interest because the lender can collect the collateral in case of default. There are different types of loans depending on the security type. Car and mortgage loans are the most common ones. Borrowers who attach a certificate of deposit to a credit card can get a secured card. This is a good way to build or rebuild your credit history. People apply for loans secured by an asset for different reasons. Some have been denied an unsecured credit line while others seek funds for home repairs and major purchases. While these are good reasons to obtain such a credit, you should not transfer your unsecured debts into it. Many people take out a second mortgage or a title loan to pay off their credit card debt or other bills. This puts their car or home at risk if they are unable to pay off the financial obligation. It is a better idea to try and pay off your unsecured debts quickly. If you are looking to borrow, you can get secured loans in from regular banks, credit unions, online lenders, and specialized financial institutions. The first step to getting a loan is to determine the amount of money you need. Since you’ll be paying interest charges on the balance, it is unwise to borrow more than what you need. You have to offer some asset as collateral, and it should be valuable enough to cover the debt’s balance. You should think of the assets you can use to secure the loan. You can offer any item of value such as real estate, boat, car, or cash investments. Some financial establishments will allow you to use bonds, stocks, and other investment instruments as collateral. This is a beneficial arrangement because your investments will be held as collateral while they are earning you money. You may use the item you’ve purchased to secure the loan. For instance, you can use your new automobile as collateral, but this may put you in double jeopardy in case of default. Finally, local lenders and pawnshops allow people to use furniture, appliances, electronics, and jewelry to secure a personal loan. Before you apply for a credit, visit your local bank or make an appointment with a loan officer. If you have been a long-standing client of the bank, there is a good chance you will get favorable terms. Look for other sources of financing if you are unhappy with the terms and interest rate offered by your bank. There are many alternatives to check, both through non-traditional lenders and online. Wholesale banking companies are one example. When looking into different offers, remember that there are other important considerations besides the annual percentage rate. Inquire about the term of repayment, the penalties for missed or late payments, and any fees that may apply. As you probably know, missed and late payments will lower your credit score as well. Moreover, the lender may seize the collateral if you default on the terms of repayment. You may also try to negotiate the interest rate down. You can demand lower interest rate and better terms since you are offering collateral. When you sign the borrowing agreement, make sure you sign over your collateral. Double checks to ensure all items on the lending documents appear at per your agreement with the financial institution.