The repercussions for failing to keep up with repayments on secured loans are serious, so it's important you know what help you can get.
A secured loan, is a loan in which the borrower gives an asset (e.g. a car or property) as security for the loan. This then becomes a secured debt owed to the creditor who gives the loan. This means the creditor/lender can legally sell your house or asset to obtain their money back if you default on repayment.
Every lender is different and your interest rate can depend on your credit score; before lending, creditors will look at your income, current credit commitments, equity and credit score.
The repercussions for failing to keep up with repayments on secured loans are serious, as lenders can repossess your home – so it is always advised to shop around to find the right secured loan for you.
What if I am struggling with my secured loan
If you are struggling to pay off multiple debts, it’s important to prioritise any secured loans you have. This way, if the loan is secured on your home you’re less likely to face repossession procedures and if the loan is secured on another asset it will be protected from being sold.
If you’re worried that you can’t make the next repayment, contact your lender to discuss your options. They may be able to help if you explain your situation fully – be clear and honest.
If you default on your secured loan, meaning if you miss a payment, then your lender will typically write to you first, asking you to make a payment to cover any you’ve missed. Don’t ignore this letter, even if you can’t pay right away.
Stay in contact with your loan provider and make it clear that you’re keen to find a solution.
If you are struggling to pay a secured loan or have difficulty paying outstanding debts, please call Aperture, we offer free debt advice. You can contact us free on 0333 939 7919.