By Jeff Lakie / Published on May 17th, 2008 / Finance
There are so many reasons why you might want to use a secured loan. Secured loans are loans from lending institutions that use some of your assets or equity as collateral. That means that you can offer the bank your house or your car or your stock certificates in exchange for money. Obviously, the bank doesn't use your house or your car your stock certificates -- they're still yours -- but you basically tell the bank that if you do not pay your loan back, they can have that instead. Lending institutions like secured loans because, unlike unsecured loans, they know that there are assets they can claim to back them up if you default on the loan. And they know that you are more likely to pay back your loan than to give up your house! In many cases a secured loan will get you a lower rate of interest and perhaps a longer-term to pay it back than an unsecured loan.

So what might you use a secured loan for? There are many good reasons to use one. One excellent way to use a secured loan is for debt consolidation. That is, to pull together a number of higher interest debts and pay them off with one single lower interest loan.

Another excellent use for a secured loan is to purchase an item for which you might normally pay higher interest over a long-term, like a car for example. If you purchase a car for $20,000, over time the principal plus interest payments you make on that car will be much more than $20,000. However, if you want to take advantage of spreading your payments over time but don't want to pay the high interest associated with financing a car, you may be able to use the value of the car or the value of your house to get a secured loan to pay for the car.

Another excellent use for a secured loan is as a bridge loan in an emergency. While you could take a few days to get the money, getting some emergency cash at a lower interest rate that you can pay back over time is an excellent way for you to deal with a costly unexpected crisis.

There are three reasons why you might want to use a secure loan. Secured loans are an excellent way to get cash when you need it and to take advantage of lower interest rates and a possible longer term of payment than other forms of loans.


Jeff Lakie is the founder of Secured Loan Information a website providing information on Secured Loans
Tags: loan