Secured loans are loans that are offered with some form of collateral to ensure the lender will receive his money should you default on the loan. Since you need to offer some measure of compensation in the event you do not repay the loan, these loans can take longer to process. The form of collateral you offer can increase secured loan processing times, depending on how long it takes the lender to verify your form of collateral.
The most common types of collateral used in a secure loan are homes or automobiles. For those who typically need a very large sum of money, the equity in their home is used to get the money in order to make renovations, pay outstanding hospital bills, or take out loans to send their children to college. These home equity loans can take anywhere from three to five days to approve, since the lender must assess your situation to determine how much they are willing to loan you based on how much your home is worth. You will usually be able to get around 50% to 75% of your home’s equity in a loan. You will probably not be able to find a lender who is willing to lend more than 75% of what your home is worth, since they want to be able to recover their cost plus a little extra should you default on the loan.
Home equity loans of this caliber usually take between 3 to 25 years to repay, depending on the amount you borrow. Sticking to your repayment schedule is absolutely necessary in this case, as you could be charged a prepayment fee if you manage to repay the loan before the agreed loan term ends. This is because a lender expects to make a certain amount of interest off of you and if you repay months in advance, their amount of interest is not met.
Secured personal loans can allow anyone to borrow a large sum of money for just about any reason. Your approval is subject to the loan processing to determine whether your collateral is valid and if you will be able to repay the loan. One of the advantages of having a secured loan is the fact that interest rates are considerably smaller due to having collateral, which is the main reason many people seek secured loans versus unsecured loans.
The only downside here is that secured loan processing generally takes longer than unsecured loan processing because your collateral must be assessed. Since processing time is dependent upon your collateral, you may find that putting your home down as collateral can considerably lengthen the time it takes to get the loan. You may even need to allow an assessor to visit your home to determine whether or not your home is worth the amount you claim on your loan application.
As with any loan, your financial history plays a very important role in how fast the loan is processed as well. If you have average to poor credit, your loan will take longer to process since the lender must weigh the benefits versus the cons of lending you money. You will also need to have your financial details at the ready to speed up the process. A few common things lenders like to see is debt repayment history, previous debt details, and any statements from your recent credit cards as well as your bank account.
You can apply for secured loans online, but you will still need to supply all of these details either via fax or through scanning and email. As with any loan application you do in person, you need to make sure the information you provide is accurate and correct in order to speed up the loan processing phase.