Types of Secured Loans for Individuals and Businesses

Mortgages are the most common types of secured loan. However, there are many different types of secured loans, including loan products designed specifically for businesses or individuals. A secured loan is just a loan that includes some type of security, such as a home. Other than real estate property, loans may be secured with almost anything of value.

Collateral Security vs. Additional Security

Most secured loans either use additional security or collateral security. Collateral security refers to loans where the security is the item that is being purchased. With a car loan, the car is the security. When buying equipment for a business, the equipment is the collateral. Additional security is used to secure additional funding or lower interest rates. Businesses may use this option when applying for business loans to fund expansion or their starting costs. The additional security typically comes from real estate properties, such as a building or land. Within these categories, there are many types of secured loans including mortgages, car loans, boat loans, and secured personal loans.

Secured Loan Types

Nonrecourse Loans - Nonrecourse secured loans offer limited liability to the borrower. With all types of secured loans, the borrower risks repossession of his or her collateral if he or she stops making payments. The lender may then seize and sell the asset to recoup their losses.With a nonrecourse loan, after seizing the asset, the borrower’s obligation is fulfilled. If the sale of the asset does not cover the remaining balance of the loan, the borrower is not required to pay the remaining balance.
Mortgages - A mortgage is a type of secured loan where the loan is secured with a property. Home loans are mortgages. In fact, these two terms are often used interchangeably. However, a mortgage is not always a home loan.An individual may obtain a second mortgage when he or she needs access to more funds. Homeowners who tap into their equity with home equity loans are obtaining second mortgages as the loans are secured with the homes.Business owners may also take mortgages to fund their business operations. This loan is still considered a mortgage even though it was not obtained for the purpose of buying a home.
Home Loans - Most home loans are secured loans as homes are often the biggest asset that people ever purchase. To reduce the risk to the lender, they need security. The home loan is typically secured with the home itself.
Car Loans - Car loans are secured loans that are secured with the car being purchased. If the borrower stops making payments, the lender can seize the car.
Boat or RV Loans - Besides cars, people can get secured loans to purchase any type of vehicle. There are loans for boats, recreational vehicles, motorcycles, and other types of transportation.
Secured Personal Loans - Personal loans may be secured or unsecured. With a secured loan, borrowers may qualify for better interest rates. A secured loan may also be needed for those without good credit. These details also apply to secured personal credit cards.In fact, bad credit loans are typically secured loans. These loans often require the borrowers to use their homes as collateral. However, some lenders may accept vehicles as collateral if the value of the vehicle covers the borrowing amount.
Secured Business Loans - Secured business loans may be used for a wide variety of purposes. A variety of types of collateral may also be used to secure the loan.Businesses that take out loans may secure the loan on their real estate holdings, land, equipment, machinery, and other valuable assets.

Benefits of Secured Loans for Lenders and Borrowers

Lenders enjoy secured loans because they are low-risk investments. They get to collect interest during the life of the loan with less risk that the borrower will default. Due to the risk of losing the collateral, people often prioritize secured loans over unsecured loans. If the borrower does stop paying on the loan, the lender may sell the asset. This puts more pressure on the borrowers to pay their loans on time. Why should you consider a secured loan? They often provide lower interest rates and are suitable for those with bad credit. You also get access to higher borrowing limits. Were you recently turned down for an unsecured loan? You may qualify for a secured loan.

Secured Loan Types

Types of Secured Loans for Individuals and Businesses

Collateral Security vs. Additional Security

Secured Loan Types

Benefits of Secured Loans for Lenders and Borrowers

Whole Of Market Comparison Site

Bridging Loans

Rates from 0.55%

Development

Rates from 0.70%

Secured Loans

Rates from 6%

Auction Finance

Rates from 3.50%

Mortgages

Rates from 4%