Those who are in the market for a loan would be well served to have some knowledge of the subject. All loans fall into one of two categories – secure and unsecure. Secure loans are those that are protected by collateral or an asset. In general, secured loans are the best way to obtain large sums of money. In fact, a secured loan is often the only way that someone can access a large amount of money.
A mortgage is a form of a secured loan. A person buying a home normally does not have the resources to pay for the house up front. The person can secure a mortgage by offering the house as collateral. People generally want to stay in their homes, so they will do whatever it takes to repay the loan. If a homeowner fails to make payments, the lender can go through the process of foreclosure and take possession of the home.
Car loans are another form of secure loan. If you are buying a new car, you probably don’t have $20,000 or $30,000 lying around. You take out a loan to purchase the vehicle. The vehicle is the collateral that secures the loan. Just like the person who buys a home, you must make timely payments or the vehicle can be repossessed by the lender.
While most secured loans are used to buy something, not all of them are. A home equity loan is one that can be taken out based on the equity in a home. The amount of home equity a homeowner has is the current value of the home minus whatever is owed on a mortgage. The home equity loan is also secured by the home and failure to pay can also result in foreclosure and repossession of the home.
Not all secured loans are for large amounts of money either. Car title loans are normally those that are between a few hundred and a few thousand dollars. A car title loan is one that can be taken out by anyone who owns a vehicle and has a clean title. The vehicle must be paid off or, in some cases, almost paid off.
Companies like Embassy Loans of Florida have helped thousands of customers access cash for various emergency situations. When someone loses a job and needs to pay the rent, a car title loan can save the day. Unlike other secure loans, car title loans do not require credit checks and can be completed in as little as an hour.