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Secured Personal Loans

Posted February 9th, 2010
by Staff

securedMany consumers are struggling with their credit now and may continue to do so in the foreseeable future. If you’re one of these, then most likely you have a poor credit score. If you have a poor credit score (below 620), it may be very difficult, if not impossible to get any type of loan (car, house, boat, etc.) let alone a personal loan.

Even if you’re able to get a loan, the interest rate may be so high, you might become in danger of defaulting and cause more problems for yourself.

You might want to consider a secured personal loan. It can help improve your credit score without having to worry about a high interest rate.

How Secured Personal Loans Work

These loans come with lower interest rates because they’re secured. Secured with what? Usually, the borrower borrows against money in a savings account or other asset which secures the loan.

In some situations, you’ll put funds (maybe $300 or $500) on the card and borrow against it. The rate is low because the lender has the money.

The idea then, is to buy something.  Then pay it back in a timely manner. This pattern of financial responsibility will begin to establish your damaged credit. If you don’t repay the loan, of course, the lender will seize the asset.

Seek out a reputable lender who understands what you’re trying to do and who will work with you to help rebuild your credit.  It’s a safe way to show you can handle credit and will eventually improve your credit rating.

Photo via DeclanTM

Categories: Advice



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