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How Can I Obtain a Secured Loan?

A secured loan is a type of loan wherein the borrower has to put up collateral - something he owns which is of value. Secured loans have the advantage of having lower interest rates and better repayment terms as opposed to unsecured loans which do not require collateral. Property, vehicles, and investments can be used as collateral in most cases. In case the borrower defaults on the loan, the creditor has the legal right to claim the collateral as a way of recouping his losses.

How does one go about getting a secured loan?

More than having an asset to put up as collateral, you have to have a good credit history. Lenders place high value on collateral, but they place higher value on the credit history of the borrower. As such, it is important that, before applying for a secured loan, you know that your credit record is as clean as possible. You can keep a good credit record by paying all your bills on time, not having too much existing debt, and limiting your active credit cards to a minimum.

If your credit history is clean and you have an asset which you can use as collateral, you simply have to approach a bank or a lending institution for a secured loan. The best way to go about it is to use your local bank which you have had previous dealings with. If you have a relationship with the bank, your chances of getting approved for a secured loan will be higher. More so, your track record will assist you in obtaining better interest rates and repayment terms - assuming that your record is a good one.

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