Is your credit score poor? Do you have very less credit? Are you still looking to obtain a loan? If yes, then the only option you have is to take out a secured loan. Such kind of loans is offered by the different banks and the lending institutions like credit unions. A secured loan is the one which is not supported by credit but by asset which has some value and can be liquidated in case you become a defaulter. These assets are known as collateral.
Your own house
Do you have your own house? If yes, then do you know that you can use it in the form of collateral if you are looking for a loan? You need to have sufficient equity in your property so that you may be able to use your house as collateral.
However, if you’re having a mortgage on your property, then the amount that can be used as collateral is the amount of equity you’ve built into it. Suppose, if the value of your house is $100,000 and you need to pay $50,000, then you won’t be able to obtain $100,000 loan by using your own house.
Your valuable car
Are you having your own car? If yes, then you can use it anytime you want as collateral for obtaining a secured loan. You need to keep in mind that if the loan amount is more than the vehicle’s worth, then you will still be held responsible for the difference in case you turn out to be a defaulter. The lender may sue you if you fail to repay the loan you’ve taken out. Suppose, if you had obtained a loan of $10,000 and have $3,000 car’s value in the form of collateral and you need to pay $7,000, then the lender has the right to take away your valuable and even sell it off for getting back his amount. In case the lender is able to get $2,500 for your car and you still need to pay him $4,500, then he may even recover his loss by suing you.
Your bonds and stocks
If you have stocks and bonds in your name, then you can use them as collateral to get a loan. The banks and the lending institutions will be accepting them as they can be liquefied and valued easily. Unluckily, the stocks are unpredictable and as such, you’ll never know when its value in the market may fall or rise. Thus, in case the value of your stocks decreases in value and you have defaulted on the loan, your stocks will be taken away by the lender.
Thus, if you are having collateral and you require obtaining a loan, make sure the amount is such that you will be able to pay it off on time. You need to keep in mind that in case you are at a default state, the lender possesses every right to take away your collateral so that he may get back the money he has given you.