Obtain a personal loan with guarantee
If your goal is to get a secured personal loan, here are the steps to follow:
- Decide what to use as collateral
- Find secured loans
- Compare several lenders
- Choose a lender
What can you use as collateral on a personal loan?
Think about what can be used as collateral on a personal loan by thinking about valuables that can be professionally appraised. For example:
- Investment accounts
- Retirement accounts
- Fine arts
As long as the value of the collateral in question is high enough to protect the lender against loss, it can be used as collateral.
While a loan can provide funds quickly, it’s also a risk – the lender can repossess and sell your collateral if you miss payments. As you would with any major financial decision, take your time and think about the risk you’re willing to take.
Find secured loans
There are two types of personal loans: secured loans and unsecured loans. If you use collateral to get a loan, you take out a secured loan. We will delve deeper into secured loans below.
What is a secured loan?
A secured loan is a loan that you get with collateral.
You apply for a secured loan in much the same way you apply for a regular personal loan. And you can use the loan money for whatever you want just like other personal loans. The main difference with a secured loan is what happens if you don’t pay your loan back.
With a regular loan, the lender can sue you if you don’t pay, but they can’t take anything from you. With a secured loan, you agree to give the lender something specific (like your car or retirement account) if you can’t pay off the loan.
If you are looking to get a bad credit loan, a secured loan may be your best option. It is easier to get approval for a secured loan than for an unsecured loan. Secured loans are also a useful option if you need to get a loan without credit.
Compare several lenders
Ready to get a secured loan? Be sure to compare several personal lenders before making a decision.
One of the best ways to compare lenders is to pre-qualify for a personal loan. This shouldn’t impact your credit (ask your lender to check). Pre-qualifying is not a commitment to borrow from any particular lender. This is simply an opportunity to get a more personalized loan offer from a lender, based on your unique financial history.
Whether you want to build or restore credit, a secured personal loan can be an effective way to build a positive credit history.
Should I get a secured loan?
The advantage of a personal loan is that you can get a loan even if you have bad credit, poor credit history, or any other issue that separates you from easy loan approval. A secured loan is also beneficial because you pay a lower interest rate than you would pay on an unsecured personal loan.
The downside is that you are risking your warranty. Remember, the lender has the legal right to take possession of the collateral and sell it if you don’t make the payments as agreed.
Whether you take this risk is a personal decision. Only you know how easy (or difficult) it will be to make payments. Only you can decide how important it is to you to obtain a personal loan.