Loans Blog

It's regarded as a seedy underworld by some, but more and more of us are turning to pawn as the credit crunch tightens its grip on our finances.

As the banks who once liked saying 'yes' line up to say 'no', pawnbrokers are gaining in popularity as a place to get a fast and easy secured loan against property of value.

If you've got equity in your home, you can use it to get a secured loan fairly simply. Great. But hang on, what's that loan for?

If you're considering taking a secured loan against your home to pay off credit card debt, then you should be mindful of some crucial facts. Your credit card debt is basically an unsecured loan - meaning there is no collateral for the lender to repossess from you if you default on the payment. If you effectively convert this debt into a secured loan, you could end up losing your home as a result of any failure to meet the agreed payments.

If you need to know what's the best kind of loan to suit your individual circumstances, you can have an informal chat with a professional advisor today by calling 0844 560 7703.

Secured loan company, Endeavour Personal Finance, has said they will not be accepting any further applications for new business.

A spokesman for the parent company, HFC, said, “We have conducted a review of the business and as a proportion of our bank’s business, EPF is tiny and doesn’t fit with our distribution channels.”

According to Transact - the national forum for financial inclusion, an increasing number of people are struggling to make ends meet. They say that a secured loan can be a valuable source of funds to overcome this growing problem.

Jamie Elliot, of Transact, said: "People have been proactively encouraged to take out a huge level of debt at a time when credit was relatively cheap. But now, money is much more expensive and people are coming off fixed-rates... A large number of people are already very stretched.”

When you take out a secured loan against your home, you want to know that the value in your home will continue to cover the amount you owe.

Better still, you hope it will become worth more than the amount you owe.

So, if the loan is for home improvements, then you should be adding value to that home - as well as adding peace of mind in the knowledge that your home equity is growing beyond the value your loan repayments.

A charity offering advice to people who find themselves with unmanageable debt problems, The National Debtline, has reported an increase in calls to their help line.

A spokeswoman said: "We have seen a 20% increase in the number of people who have been calling our helpline. The debts they need help with include mortgages and also loans secured against their properties."

Secured loan applicants are on the increase, with unsecured loans becoming harder to find. It's vital to remember that the risk associated with secured loans can be high - especially if you take out a second mortgage on your home, without setting realistic repayments.

It's becoming increasingly difficult to arrange a personal loan these days. Credit is far harder to obtain in all areas, as lenders start twitching about the risks in the current financial climate.

This has inevitably led to an increase in the uptake of secured loans - usually secured against the value in the home of the borrower.

However, it's important to see the risk associated with these loans for what it really is. The question you should be asking is not "How can I get a loan?" - it's "Can I afford to get a loan at all?"

A loan is not something you should take at any cost, regardless of the level of risk. It's a harsh reality that you could end up losing your home if you take a secured loan that you can't manage to repay at the agreed level - after all, that's why lenders will still offer these kind of loans because the risk lies primarily with you rather than them.

Whatever you want the cash for, it's rarely worth losing your home over.

A secured loan is usually secured against the value of your home. So, one of the best ways to get together some cash for home improvements is to take out a secured loan against the home you are planning to improve.

By improving the home, you should be adding value to it - the lender will be reassured by this fact so there is usually little to stand in the way of being granted a home improvement loan.

I'm just going to admit it. I've always been a bit of a Carol Vorderman fan, even though that's probably far from cool these days. But she does make it increasingly hard to defend her right to admiration while she continues to blaze a dusty trail of somewhat unscrupulous personal loan advertisements.

The latest advert in which she appears has been labeled a 'debt trap', encouraging vulnerable homeowners into unmanageable levels of debt.

The secured loan advert, for a company called 'First Plus', offers an attractive low interest rate of 4.9% for the initial 90 day period of the loan, after which the rate increases to a staggering 8.5%.

The lesson, as always, is to look out for such tricks and be fully aware of the complete terms of the loan before entering into any agreement.

I read a piece this morning about using your jewellery as collateral against a secured loan to finance a new car purchase.

All perfectly legitimate, of course, but it got me thinking - imagine what car Jimmy Saville could buy if he took out a personal loan secured against all of his jewellery!

Rumour has it (yes, I've been talking to my source down the pub again) that legendary rocksmiths 'The Cure' got their name from a personal loan advisor with a lisp.

Robert Smith and his musical pals were pacing around the lounge desperately trying to think of a name for their band at his Sussex home one afternoon in 1976, when the lispy loans expert knocked on the door. Smith answered the door and the salesman asked,

"May I offer you thumb perthonal loan advithe, thir?"

Mr Smith replied: "What kind of loans are you offering, sir?"

"Thecure loanth, thir."

"Genius! The Cure! That's it!" Smith proclaimed as he shut the door.

The secured loan salesman went away a little confused and deflated that day. If only he knew what a vital part he'd played in the history of this great band.

A logbook loan is just one of the many types of secured loan available on the market.

The most common type of secured loan is secured against a property, as this is usually the best valuable asset most borrowers have to offer as collateral to secure the risk posed to the lender.

However, a secured loan can be secured against anything that meets the value of the loan. A logbook loan, as the name suggests, is secured against the value of your vehicle. It's called a logbook loan because you hand over your logbook to the lender as security for the duration of the loan term.

In the current wobbly financial climate, the secured loan is continuing to take centre stage as lenders pack their carefree, risk-taking attitudes into a box in the bottom of a wardrobe in the spare room - hoping they'll make use of them in the future; knowing they probably won't; but unable to part with the idea just yet.

Results of recent research conducted by Alliance & Leicester show that “overall borrowing trends are moving away from unsecured debt, while secured lending continues it’s rapid pace.”

Nemo Personal Finance, the secured loan subsidiary of Principality, announced last week that it is to axe 70 jobs at their Cardiff HQ.

The move comes as a necessary reaction to the credit crunch. Senior bosses at Principality say they will re-deploy staff in other areads of the business.

In recent years, the UK has experienced a huge increase in the number of people applying for a secured loan. This is set to grow further still, amid the credit crunch which is seeing banks tighten their purse strings as lenders offering unsecured loans become increasingly difficult to find.

Common types of secured loan include home owner loan, debt consolidation loan, mortgage loan and second mortgage.

It is common thinking that people with bad credit have about as much chance of getting a personal loan as the UK has of experiencing a long hot summer this year.

Thankfully, this is not true.

A secured loan uses your property as collateral against the sum borrowed, so the risk to the lender is greatly reduced. In these circumstances, your credit rating is far less relevant so you may be surprised how easily you can arrange finance.

To be eligible for a secured loan, you must own your own home. This is because a secured loan, as the name would suggest, is secured against the value of your property.

Your credit status is less important with this type of loan, as it poses less of a risk to the lender because of the security in the value of your home.

You will still need to qualify on other grounds as well - for example, your financial and employment status.

According to Moneyfacts.co.uk, personal loan interest rates continue to rise, with the overall average rate now standing at 4.6 per cent higher than this time last year.

The ongoing credit crisis is being blamed for the steep increases, as lenders become more cautious and concentrate on getting money in rather than lending it out.

The site also reports that the secured loan market is now reducing, seeing eight lenders, including Picture Financial and Alliance & Leicester, no longer offering a secured loan.

"Your home may be at risk if you fail to keep up repayments on a mortgage or any other loan secured against the value of the property."

It's a sentence we see everywhere, nowadays - perhaps too much. The words are so familiar that their meaning often escapes consideration.

In 2007, over 27,000 people fell so badly behind with their mortgage or secured loan repayments that their homes were repossessed by the lenders. That's a worrying enough statistic on it's own, but it seems even more shocking when you consider that that's almost twice the number of repossessions in 2005.

Very few personal loans are taken out for reasons that would be worth losing your house over, so it's vitally important to make sure your repayments are realistic before entering into any loan agreement. A trusted loans advisor will help you work out what you can REALLY afford - rather than just giving you what you want to borrow.

According to uSwitch, interest on finance loans provided by car dealerships is typically charged at around three percentage points above the best available car loan deals from other lenders.

A better route to take can be a secured loan against the value of your home or the value of the car itself. A loans expert can talk you through how this works.

According to research conducted by the price comparison website, MoneyExpert.com, the average interest rate available on a secured loan of £15,000 is currently at 5.9%, with the average rate for an unsecured loan standing at 8.44%.

"Do the math!"

The comparative savings between the two types of loan are truly substantial, so a secured loan is clearly the way to go, if you are eligible. A loans advice expert will save you time and effort, as well as being able to fill you in on the best current deals available to you.

An increasing number of people in the UK are choosing secured loans, due to the increasingly attractive interest rates being offered by providers.

MoneyExpert.com reported an 85 per cent increase in demand for secured loans in the 3 months ending January 2008.

A secured loan (a loan secured against the value of your home) can save you huge payments in interest, according to a recent independent study.

MoneyExpert.com says that the average rate for an unsecured loan of £15,000 is 8.44 per cent, compared with a secured loan of £15,000 which has an average rate of just 5.9 per cent. That difference adds up! Ask a loans expert if you want further advice.

Unless you're lucky enough to have a rich uncle, or find a few grand lying in a hedge on the way home from the pub, secured loans are still widely considered the most inexpensive way of raising those necessary funds. So when you find yourself in need of cheap financing, secured loans are often the best way to go. However, it is still possible to obtain better loan terms than you might find initially on your secured loans if you do your homework properly. Talk to a trusted loans company and they will find the best deal for you.

Following monday's hefty price-crash in the US stock market, the effects are already being felt across the wider global economy, amid fears of recession. £77bn was wiped off UK share prices alone as a result.

House prices are expected to take quite a fall as the year progresses, so now could be the best time to take advantage of the current value of your property to maximise your loan potential. A secured loan is a loan that is secured against the value of your property, so the lender is able to balance the risk of lending to you - this means that if your property decreases in value, your borrowing potential could also decrease with it.

So if you're thinking about a secured loan, it may be better to act sooner rather than later.