Most of the loans you find here are unsecured loans, ie private loans and quick loans, but we have loan brokers who mediate both private loans and loans with collateral. Even if you have payment notes, you have the opportunity to take out a loan with the collateral of these two loan intermediaries, even if the interest rate is higher then. And if you have no comments? Yes, then you can get a really low interest rate.
What is a secured loan?
If you are going to take out a loan with collateral, the lender wants you to have some kind of mortgage for the loan, a mortgage that the lender can take if you cannot repay the loan. Usually this mortgage is usually what you buy for the money, such as a home or a car, but not always. If you already have a home that is low mortgaged, or not mortgaged at all, you can have it as a mortgage instead.
The two most common loans with collateral are mortgages and vehicle loans.
Mortgages – always require a security
All mortgages require a security and normally the mortgage you buy is your mortgage. Sure, you can afford a cheap condominium or a small villa in the countryside with a private loan if it doesn’t cost more than USD 500,000, but you shouldn’t do that because the mortgage rate is much lower than the private mortgage rate.
If you are going to take out a mortgage, the following applies:
- You can borrow a maximum of 85% of the home with a mortgage and 15% you have to pay in cash, which you can either cover with your own money or with a private loan, or both.
- As of June 1, 2016, you must repay at least 2% of the original loan amount per year if you have a loan-to-value ratio of over 70% and at least 1% at a loan-to-value ratio of 50 – 70%, so if your loan-to-value ratio is not below 50%, you can Do not get an amortization-free loan.
- You can choose between a variable and fixed mortgage rate. A variable mortgage rate means that you only fix the interest rate for 3 months at a time, which in practice means that the floating mortgage rate does not change more often than every three months. If you want to fix the interest rate, you can do so for 6 months up to 10 years. Historically, you earn from having a variable mortgage interest rate (at least in the long term), while a fixed interest rate makes it easier to plan your finances and does not suffer any interest shock.
If you have a high salary and a large mortgage loan, lender recommends that you obtain an income insurance so that you can continue to pay for your loan should you become unemployed, because there is no further need to sell his home in order to receive compensation from A – the cash register is too low.
If you are going to buy a car or a motorbike, you can have the vehicle as collateral for the loan, but you can only lend 80% of the vehicle and pay the rest out of your own pocket or with a private loan. There are also other vehicle loans, for example for snowmobiles, boats and caravans, which also require security. These loans are called by some banks for leisure loans.
But you do not necessarily need to take out a loan with collateral if you are going to buy a car, motorcycle or any other vehicle, you might as well pay for it with a loan without collateral if the vehicle does not cost more than USD 350 000 – 500 000. The interest rate for a private loan can certainly be a little higher but not always. You can see what the differences are between the different loans in our article on car loans, because even if the article is about car loans, it works much like other vehicle loans.