Borrowers who are in need of funds and looking for a loan have two options in front of them namely secured and unsecured loans. Secured loans are more suitable for them if they need a large sum of money since these loans enable them to get a large amount based on the value of the asset they give to the lender as security. Moreover, they do not have to be repaid very quickly, and so, the borrower has to pay low installments of such loans which are quite affordable for them. Furthermore, the low interest rate on these loans makes them more affordable for the borrowers. Unsecured loans although do not require a collateral to be approved but have a high interest rate and short repayment period as well as strict terms and conditions. Thus, unsecured loans prove to be more costly than secured loans making the latter a highly feasible and attractive choice for borrowers.
If a borrower really needs a loan to get funds with which he or she can finance large expenditures, then a secured loan can be easily availed. The borrower can go to their local lender or bank anytime and apply for a loan against a security. The loan is approved in a few days after which the borrower can retrieve the funds from his or her bank account. Nowadays, borrowers do not even have to go anywhere to get a loan as loans are available online. Thus, they can search for appropriate loans and lenders and apply for a secured loan online while sitting in their home or office. The online availability of secured loans has definitely simplified the process of getting these loans.
One of the loans that fall in the category of secured loans is home equity loan. This is a loan which is taken against equity in one’s home. Equity is the market value of a home minus any outstanding mortgage on it. The amount of the loan then depends on the amount of equity the borrower has in his or her home. Borrowers are able to get about 80% to 125% of their home equity but it is advisable that they opt for a less amount. Hence, home equity loans allow them to get a secured loan without placing the whole asset as security.
These loans are better for people as they do not have to make many sacrifices. This is because borrowers do not have to spend a lot on interest and use up a large portion of their income on monthly installments when they opt for secured loans. Moreover, due to the availability of these loans, they do not have to sell off their homes to get the funds when they really need them.