The most common types of loans for people with bad credit are called secured loans, which require putting up some form of equity as collateral to secure your loan.
Leveraging your personal assets can help you secure a personal or business loan at a substantially lower interest rate, and if you’ve got poor credit, it’s probably also one of the only forms of affordable financing that you’ll have access to.
The value of the assets you use as collateral – whether that’s your home, car or business equipment – is used to determine the rate of your loan.
With several different types of secured loans available, including secured personal loans and secured business loans, as long as you’ve got some assets to put up as collateral, you’re virtually guaranteed access to credit.
So whether you need some additional money to start your own business, or to help keep the lights on, you’ll want to review this guide to secured personal and business loans.
Secured Personal Loans
As stated earlier, a secured personal loan is typically provided at a lower interest rate than an unsecured loan because it’s been “secured” by your personal assets.
The reason why lenders are willing to give lower interest rates on these types of secured loans (even to borrowers with poor credit) is that they don’t have to worry about losing all the money they lend if a borrower fails to pay off their loan.
When a borrower with a secured loan defaults (fails to pay back their loan), the lender is legally entitled to take possession of whatever asset was offered up as collateral to secure the loan in the first place.
In that way, you can think of the securing part of the loan as an insurance to protect the lender from whoever they’re offering money to.
That may sound like a bad deal for the borrower, but the reason why you’d want to put up collateral to get a secured loan instead of pursuing an unsecured loan is that you’ll be able to get the funds at a lower interest rate, meaning it’ll cost you less to pay the loan back in the long-run.
Some common types of personal assets people use as collateral for secured personal loans include houses, cars, pieces of property, jewelry, valuables or anything else that they and the lender both agree has some value.
Borrowers give their lender the title to whatever asset they decide to use as collateral and in return the lender provides them with money in the form of a loan. Typically, loan payments are due each month, but oftentimes loans can be structured differently to fit particular financial situations. The key point to keep in mind is that once the borrower pays back their loan in full, the lender returns the title or other form of collateral used to secure the loan to the borrower.
And, alternatively, don’t forget that things can go south quickly should borrowers miss payments, fall back on their loan repayment schedule, or completely default on their loans. Should that occur, lenders will keep whatever was issued as collateral for the loan, taking permanent possession of the borrowers assets, whether that’s their house, property, or car that was used to secure the loan.
Secured Business Loans
On the other side of the same secured loan coin is the business loan, which is a secured loan taken out by a sole proprietorship, limited liability corporation or any other type of business.
Secured business loans are used to large corporations, mom and pop shops, start-ups, and virtually every other form of business entity in existence.
Whether the business is looking for help to expand their company’s staff, launch a new product, or pay off some debt that’s about to run late, lenders are likely to scrutinize both the business owner and the businesses books in an effort to determine how safe issuing a loan to this business entity might be.
In most cases, businesses will need to offer some form of collateral to secure their business loan. Common forms of collateral used to secure business loans include real property, but also cash savings or deposits, equipment, stock or other assets owned by the business.
Businesses need to be realistic about what they’re issuing as collateral, since a poorly structured loan could lead to significant challenges, defaults, and loss of assets. It’s also important that business owners remain realistic about the risk they’re taking on when taking out a new loan, especially since failing to live up to the conditions is likely to sink the business entirely.
How Car Capital Financial Can Help
Car Capital Financial provides low interest secured loans to both individual people (secured personal loans) as well as businesses (secured business loans).
Our secured loans are tied to titles of assets, meaning that we can issue a loan for taking temporary possession of the title of any vehicle (be it a car, truck, RV, boat, airplane, helicopter, motorcycle, personal watercraft or anything else).
With over 15 years of experience providing affordable vehicle title loans to clients throughout Southern California, we’ve helped thousands of customers out of sticky financial situations.
We don’t run credit checks, don’t care what your credit score is, and won’t use any of your previous financial history to influence the affordability (interest rate) for your title loan or repayment schedule. Title loans are issued based on the borrower’s ability to repay the loan.
But better yet, we’ll get you the money you need without requiring that you leave your vehicle with us, as all we’ll need is the physical title.
And, we won’t place any restrictions on your use of your vehicle. Feel free to drive it as often and as far as you like.
To get your own safe, reliable and affordable title loan in as little as 30 minutes, call us now at (888) 500-9887.