Though secured personal loans are not a product that fits all, yet everyone in the UK is striving to get the cheapest secured loans in order to save their hard-earned money in every little way possible. A secured loan is a loan that is given to the borrower with a condition where he provides the lender with a security that is known as collateral to the loan amount. The collateral that is usually offered by a borrower is his home in case of a home loan and a car in case of an auto loan. Secured loans are not risky for a lender as they have something to retrieve in case the borrower defaults on his monthly payments. However, taking a secured loan might be a risky transaction for a borrower in the UK as failure to pay off the monthly payments may lead to a foreclosure or repossession in case of a home loan and an auto loan respectively. Therefore, have a look at the steps in which you can lower the costs on your personal secured loan and ensure timely and regular payments.
• Compare and contrast various loans in the UK
The best way to save money on your personal secured loans is by comparing and contrasting various quotes from various lenders. There are hundreds of secured loan lenders who are waiting to sell their products to you but it depends on you whether you’ll choose them or not. Most loan experts are of the opinion that one must compare and contrast at least 4-5 quotes from different lenders so that he can make the best choice that’ll be tailored to meet the financial needs of that person.
• Maintain a consistently exceptional credit score
As the amount borrowed with this type of loans is huge, it is more important to look for ways to save money so that you can lower the monthly repayments as much as possible. Maintaining a good credit score is a pre-requisite for getting a home loan at an affordable rate and within your affordability. Your credit score reflects your financial history and shows how much of a risk you are as a borrower. A poor credit score implies ineffective financial management and therefore the lender will become skeptical about your repayment abilities. This will raise your interest rates and thereby your monthly payments.
• Make the required down payment
The other important way to save money on your secured loans is to make the exact down payment while taking the loan. If you’re thinking about a home loan for purchasing a house, you need to pay down an amount which is usually 20% of the entire loan amount. If you’re not able to pay down 20% of the loan amount, you’ll have to pay PMI (Private Mortgage Insurance) along with your monthly payments. This will increase your monthly payments and also the interest rate. Thus, make sure that you save enough money before applying for a secured loan so that you need not pay PMI with your monthly payments.
To save time and money, you can compare secured loans online as this is the fastest way to get the quotes from different lenders and settle with the best one. Remember the risk that you’re always bearing as a secured loan borrower and try your best to make regular and timely payments towards your loan.