A secured loan is always secured against an asset, meaning that if the customer fails to make their monthly repayments the lending company are able to repossess the asset in order to cover their costs. In theory, the asset can be anything of worth, such as a house, vehicle or even jewellery. In most cases, the loan is secured against the item which is being financed
Secured loans present a much lower risk than an unsecured loan because the lender knows they will be able to recover the asset to pay for the sum if the customer fails to make their monthly payments. Another advantage of secured loans is that they are available to a much wider range of customers than an unsecured loan, meaning that even those with a bad credit rating may be able to find finance. Unsecured loans are usually available to a much more selective group of customers, usually with excellent credit and a good income.
Our first advice for anyone who feels they may struggle to fulfill their monthly payments is to contact the lender. It is better to confront the potential issue head on before you fall behind too far. Get in touch with either your customer advisor here at Creditplus or the contact details you have been provided with for the lender who provided the loan. Explain to them clearly the situation and try to work towards a resolution.
This could be a revised payment plan or payment holiday. Each lender is different and will treat the situation based on your personal circumstances. Speak to them first and you may be able to avoid Repossession.