Benefits of secured loans
Secured loans can offer a cheaper way to raise larger amounts of money, but there are risks. The interest rate on a secured loan is often lower because the risk to the loan provider isn’t as high. The downside of this is they have the right to take the secured item if you can’t keep up with your payments.
It’s not a good idea to take out this type of loan to help you pay off other bills such as your credit card or council tax. There are always other options that don’t involve putting your home or other possessions at risk.
What happens if I default on a secured loan?
The loan company will normally write to you first, asking you to make a payment to cover any you’ve missed. Don’t ignore this letter, even if you can’t pay right away.
If you have missed payments and your loan provider is threatening you with repossession, you need to act quickly. Stay in contact with them and make it clear that you’re keen to sort out the problem.
If your lender does not want to offer you other payment options and is looking to proceed with court action, contact one of our advisors. We could help you find another debt solution and slow down or stop the repossession process.
Keeping on top of secured loan repayments
It’s always possible to turn things around – but only if you face up to the situation. Here are just a few ways you can prevent the situation from getting worse if you’ve missed a secured loan repayment:
Most payments to secured loans are a set amount, at least for certain amount of time, so it’s easy to know how much you need to pay. Set aside that amount of money each month to make sure you aren’t caught short when the payment date comes around.
- Secured debts come first
If you are struggling to pay off multiple debts, it’s smart to make sure you pay any secured loans you have first. This way, you’re less likely to reach the stage where your belongings are seized.
- Speak to the company
If you’re worried that you aren’t going to be able to make a payment, contact the loan company to discuss your options. They may be able to adjust your plan to make it more affordable for your circumstances.