With more people than ever sinking into debt because of rising costs of living and backlash from the pandemic, many people are turning to loans to help them get out of tricky situations.
Secured loans are becoming more popular and more important as many people are not able to be accepted for unsecured loans or different types of loans because of their financial situation.
With many people living pay cheque to pay cheque, secured loans give them an opportunity to get the money they need whilst being able to access lower interest rates due to their loan being backed by their property or valuable asset.
Spread Payments Over A Longer Period Of Time
With secured loans you are able to make repayments potentially cheaper for yourself because you can spread your repayments over a much longer period of time.
This makes repayments much more affordable each month and you can even use a secured loan as a debt consolidation loan to help clear your other debts at the same time.
Samuel Davies of Kallyss.com commented: “It has never been more important to consider how much you can realistically repay over any loan term. If you find yourself in difficulty repaying, always speak to your lender, who will be able to assist you with a repayment plan. Now, in the current financial climate, you should avoid defaulting on loans at all costs.”
People Cannot Get Approved For Unsecured Loans
Many people are struggling to get approved for unsecured loans at the moment. Poor credit scores or not a large enough income are just two of the reasons why lenders are less willing to give out unsecured loans.
A secured loan allows people to access a loan that they need much easier, especially in 2022.
Hugo Anglesford of Doddler commented: “With interest rate rises and the people feeling a real pinch when it comes to their finances and needing to borrow money in recent times, being able to budget properly and take care of your finances is more important than ever before if you are looking to be approved for any loan, be it a short term loan option, unsecured loan or otherwise.”
Allows You To Borrow A Larger Amount
The pandemic has brought many issues into peoples lives that cannot be fixed by a small amount of money.
A secured loan is good because lenders are often willing to lend larger amounts of money on secured loans. They see secured loans as less of a risk because it is guaranteed by a valuable asset and therefore will lend more money.
Access Lower Interest Rates
Importantly, secured loans also come with much lower interest rates than unsecured loans because your home is used as security.
This will reduce the cost of borrowing at a time where many people would like the costs of living to be as low as possible.
Use Repayments To Build Credit Score
A secured loan is a great way to build your credit score if you are suffering from bad credit.
Many people struggled to pay back loans during the pandemic and this caused their credit scores to turn sour.
By making repayments on your secured loan you can build back credit so that you can have a good credit score allowing you to gain access to loans much more easily in the future.
A Perfect Credit Score Is Not Needed
Lastly, secured loans are more important than ever right now because a perfect credit score is not needed to access them.
Due to the fact that the loan is backed by a property or valuable asset, lenders are more willing to look aside if you have poor credit.
Although it may be a little more difficult to get a secured loan if you have really bad credit, lenders will even offer bad credit loans.
With many people suffering from bad credit scores in 2022, secured loans are important as they give everyone an opportunity to access loans when they need the funds.