Bad Debt Secured Loans: a Relief for Debt-ridden Borrowers

By: Celeste Parker

The reason behind the creation for bad debts may be numerous. It is usually incidental than deliberate that the borrowers tend to have bad debts in his financial history. So blocking loans for such borrowers would not be a right thing to do. Therefore bad debt personal loans have been structured so that such borrowers should be given another chance to manage their finances.

Bad debt secured loans are personal loans that can be borrowed to fulfill any personal needs of the borrower. These can be anything like debt consolidation, home improvement, car purchase, medical procedures, wedding expenses, educational funding etc.

Bad debt loans are usually charged higher rates of interest due to the discrepancy in the credit history but if the borrower is ready to pledge collateral like his car, house, real estate etc with the lender as security, he is entitled to get a lower rate of interest on the loan. The rate of interest depends upon the equity of the collateral pledged. A higher equity will fetch a lower rate of interest for the borrower. The asset acts as an assurance for the retrieval of the loan amount to the lender of and thus a lower rate is offered.

Through bad debt secured loans, the borrower can take up an amount in the range of ?5000-?75000 for his needs. The amount can be increased depending upon the equity of the collateral pledged with the lender. The term of repayment for bad debt secured loans is 5-25 years.

No risk is faced by the borrower pertaining to the ownership of his asset. Since the repayment term is long and the rate of interest is low, the borrower can repay the bad debt secured loan comfortably and the ownership of the asset can be restored.

Bad debt secured loans make a stepping stone for the borrowers who want to start afresh and want to leave their bad debts behind.

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