SECURED LOANS INFORMATION

Below you will find basic information and FAQs on secured loans in New Zealand.

        

Secured Loans

What is a Secured Loan?

A secured loan is a loan which requires the borrower to pledge a significant asset such as a home or other property as a security or collateral for the lender. This means that the lender can offer a larger loan amount based on the value of the borrower's chosen collateral, as the risk factor is lower for the lender.

Generally, car- and homeowners are the most common secured loan borrowers. You can also find secured loans for businesses.

What are the Advantages of a Secured Loan?

Secured loans usually allow the borrower to take a larger loan than, for instance, a payday loan or small personal loan. The lender will assess the value of the chosen collateral (usually a property or vehicle) and this will influence the loan amount.

As most large assets are worth a large amount of money, the lender can afford to hand out more money. This comes at a price for the borrower, of course: their pledged security could be seized by the lender if the borrower is unable to keep up with their loan repayments.

What are Secured Loans Used for?

Secured loans are most commonly used to purchase houses, cars or other large vehicles (such as marine vehicles or caravans) and for other significant purchases.

What are the Risks?

Secured loans are ideal for borrowing large amounts of money or to make a significant purchase such as your home, but there are one or two risks to keep in mind. If you fall behind or fail to meet your repayments on the loan, the lender can claim your collateral (your property or other loan security) to settle the debt.

Therefore, it is essential to remember: YOU RISK LOSING YOUR HOME IF YOU DO NOT MEET YOUR LOAN REPAYMENTS ON A SECURED LOAN.

        


Please note that Which Way To Pay New Zealand (www.whichwaytopay.co.nz) is not authorized to give personal financial advice under New Zealand's financial services regulations, including the Financial Advisers Act (Securities Commission New Zealand).

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