TYPES OF DEBT

Secured Loan Debt Help & Advice

Types of Debt

Secured Loan Debt Help & Advice

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Secured loans can be a vital part of a person’s life, allowing them to buy their first home or that new car they so desperately need. These can be a great way to get large amounts of cash with a lower interest rate for your repayments.

This type of loan is secured against one of your assets, which can have serious consequences if you fall behind on them.

Failing to keep up with payments on a secured loan can lead to the company applying to the court for repossession of the asset it was taken out against. This, understandably, causes high levels of stress and will cause serious damage to your credit score.

To add all of this, if a repossession takes place, it doesn’t always mean the debt is cleared. If the value of your home doesn’t cover the balance you owe, the lender is within their right to recover the remainder of the debt.

 

Why do people turn to secured loans?

The most common reason people will take on a secured loan is to help them buy large luxury items such as a house or a car. Generally, most people are able to keep on top of this because secured loans are considered a priority payment.

For some, they will take on secured loans to cover costs for larger expenses such as home improvements, starting a business or even a wedding. However, this may be a last resort because they are unable to raise funds in a timely manner.

Many people also will take out this type of loan as a form of debt consolidation. With attractively low interest rates, it often seems like great option if you have lucked out elsewhere. Nevertheless, if your circumstances change and you become unable to make the payments, your possessions will be at risk of being taken.

 

How secured loan debt can be avoided

Everyone will come across a secured loan at one point in their lives, but there are things you can do to avoid falling behind on payments.

Prioritise

If you are paying off multiple debts, payments to secured loans should always be prioritised. The consequences of defaulting are not worth the stress it will cause you, so set payments for these to the top of the list.

Set a budget

Normally, secured loans are fixed, making it easy for you to keep track of how much you owe to it and what you need to pay. This is good for setting a budget as you will always be able to set aside the right amount each month and ensure you never miss a payment.

Stay in touch

If you are struggling with payments, it’s always best to keep the loan provider in the loop. Contact them to advise of your situation, they will have options to help you and this can prevent them from taking further action against you.

If you’re struggling with your secured loans or are facing repossession, contact us today for free and confidential debt advice. We can help you work through your debt problems, no matter what situation you’re in.

We've helped so many others just like you.