Secured Loans Types

We all share the common knowledge that a secured loan is a type of loan protected and secured by a collateral. The collateral can be any type of property or asset that can be liquidated easily – and of course, it needs to have a value.

Why Does a Collateral Need to Have a Value?

In most cases, the value or the price of the collateral or the security set is going to be parallel to how much the loan amount will be. For instance, if the collateral is going to be a real estate property, then the lender would be obliged to provide the amount close, equal, or even higher than the value of the property.

Because of this security, a lender will most likely not be able to position higher interest rates. Unlike unsecured loans, secured loans usually have fair and even low interest rates than normal. This puts the borrower in a riskier position than the lender because if he or she defaults payment, then the lender, based on the agreement, will have the power or the authority to take control of the asset or the collateral.

The same way unsecured loans have different types, there are different types of secured loans as well. These secured loans types are some things we all know, and it’s pretty certain that we all have at least any of it.

Types of Secured Loans

Vehicle Loans

Possibly the most common type of secured loan there is, a car or a vehicle loan is when a car or a vehicle being purchased is used as the collateral for the secured loan. In this case, the lender will be paying the full price of the car to the dealership or the company.

This allows the buyer to pay off the car monthly to the lender with interest rates. In this type of loan, the lender will check the borrower’s credit history and assess other factors before approving it.

Home Mortgage Loans

The next most common type of secured loan is the home mortgage loan. In this secured loan type, the property being purchased is used as the collateral. Homes are large purchases, therefore, mortgages last somewhere between 15 to 30 years – and sometimes it’s even longer than that!

What this does is it allows the borrower to acquire the house by just giving a down payment equaling to 10 or 20 percent of the base selling price of the property or the home.

Home Loans

When an individual decides to purchase a house, then going for a home loan is a good option. The home that the borrower is purchasing is the one under collateral. When a home loan gets approved, the property that the person is living in or has invested in is the collateral.

A mortgage loan, on the other hand, is the document that protects a lender’s security on the property they’ve provided so you could acquire the property.

Nonrecourse Loans

Lastly, a nonrecourse loan is the type of loan secured by a collateral and in most cases, it’s a property even if the borrower does not pass the creditworthiness scale. In this type of loan, the lender can seize the collateral without going after the borrower – it goes instantly.

We at SoFlo Funding can help you with whatever type of secured loan you’re looking for. If you need a home mortgage loan, we have the funds to help you with it – if you need a vehicle loan, we’re more likely able to accept it; we literally are everywhere and we’ll be able to finance the purchase you’re looking at.

Most companies and other institutions don’t offer the types and the kinds of rates we offer. In fact, for a secured loan, we often provide a no-interest payment for the first few months to a year for a client who is in good standing with his credit. Nevertheless, we are a company capable of funding the purchase that you are looking at.