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Types of Loan for your Car

A secured loan is one in which the figure advanced is secured on an asset, usually a residence, which can be sold if theperson borrowingdoes not meet the payments. The most usual type of secured loan is a mortgage. Usually a mortgage is entered in to in the purchase of a property such as an apartment, however loans can be secured on a house for many varied reasons.

The main advantage to the borrower of a secured loan is that secured loans on the whole tend to have a more affordable rate of interest - often just a bit higher than the official interest rate. The advantage to the lender is that should the borrower default on payment or cannot pay, they may start court proceedings for the property or other security to be sold and the profits of the sale applied to clearing the debt. so it is very important that anyone taking out a secured loan should be definite that they will be able to meet the regular payments on time.

The big downside with mortgages is that your house, property or assets that your loan is secured on may be lost if you cannot meet the regular payments. To ensure that there will be enough cash to clear the debts, many mortgages are for less than 100% of the value of the asset. It is important that you have a payment protection policy current so that if you are unable to work through sickness or being laid off , your payments will still be madebe kept up to date. Building societies and banks normally offer both secured and unsecured loans.

Secured loans are especially suitable for major expenses such as home. The lender will consider many factors in deciding on your loan application. They will take into account your credit payment history, your work and residence history and will also assess your ability to make the regular payments.

Most people find that an unsecured loan is most suitable for making a car purchase.