There are two main types of business loans: Secured and unsecured. Secured business loans are loans for a business that require collateral, and unsecured business loans are loans for a business that do not require collateral. Lenders will only have your legal word that you will pay back the loan on unsecured business loans. Therefore, with an unsecured loan, you typically have a higher interest rate since that is how lenders protect themselves against the possibility of not getting paid back the full amount. If lenders do not get paid back the full amount, they will at least have been able to recoup more of that money through the higher interest rate that had been paid.

With a secured business loan, lenders feel more at ease since they know if you should default on the loan, they will at least have your assets that are worth the same amount to sell and so chances are, they will be able to get all their money back anyway. Because of this, lenders are a lot more willing to lend money out for a secured business loan than an unsecured business loan. Therefore, if you have bad credit, or your business is just starting out or not doing so well, a secured business loan will probably be the best for you. Assets do not have to be from the business, or even tangible. They can be the owner’s home, stocks, bonds, or even the money value from insurances!

Even if your business is doing well you may want to consider a secured business loan since chances are you will save a lot of money in interest, and as long as you make your payments, you will not lose your assets. However, if you do not have any assets worth the loan amount you need, and your business is just starting out so you have trouble getting a loan since lenders see you as a high risk business deal, you can always look for outside help. There are independent agencies of the federal government called small business administration (SBA) loan agencies that strive to help small businesses get loans that they cannot get on their own by working with the lenders. They make guarantees to the lenders should the loan be defaulted on so lenders will feel more at ease with lending out the money.

WHAT MAKES ONE LOAN DIFFERENT FROM ANOTHER?

A good number of people think that a loan is simply a loan, and that’s it, but the facts are quite different.

So assuming that you’re looking for a loan, let’s take a quick look at the different types, and at the different decisions that you’ll need to make, and that way you’ll soon understand what makes them different.

Starting with the broad brush strokes, there are secured and unsecured loans, and there are personal loans, home loans, and loans for various purchases such as an automobile. Then there are commissions, fees, and interest rates, plus additional things like the duration of the loan that must also be taken into account.

SECURED LOANS

In essence, a secured loan is simply a line of credit that is guaranteed by some kind of personal collateral, and the collateral will typically be more valuable than the amount that’s being borrowed, and if it isn’t then the interest will most likely be a little bit higher.

A classic example of a secured loan would be a home loan, but as you most probably know, nearly all the banks are in big trouble right now because they assumed that house prices could only keep going up, and they offered loans to almost anyone that they could tempt into buying real estate.

They merely required deposits that were nonsensically low in order to encourage people to borrow, and it was a terrible business practice that was simply rooted in greed, and it’s now causing a lot of distress to everyone that got caught up in it.

To add insult to injury, the banks have now gone in completely the opposite direction, and made it so difficult to qualify for a home loan, that even people with very high credit scores are failing to qualify. It’s still possible to get a home loan of course, and it’s obviously easier if you already have a property that has a large amount of equity in it that will allow you to put down a good sized deposit on your new purchase.

Most lenders now require a minimum down payment of 20%, and if it’s anything less then you’ll need to obtain private mortgage insurance.

Home loans can basically be split into two categories, a fixed interest rate loan, which means that the interest rate that you agree to when you take out the loan will remain the same for the life of the loan, and a variable rate loan that will float according to market conditions, and it’s pretty clear that the only direction in which a variable rate loan is likely to go right now, and it’s up.

Home loans are usually for 15, 20, 25 or 30 years, and the shorter the better as far as cost is concerned, because you’ll pay far less in interest.

On a thirty year loan for example it’s not unusual for the first fifteen years to be exclusively interest, meaning that after fifteen years, that you won’t have reduced your indebtedness one iota.

An automobile loan is another example of a secured loan, with the car itself being the collateral, so if you stop paying, then the bank repossesses your car and sells it, for hopefully more than you owe on it.

It’s common for the auto-dealer to arrange financing for the buyer, but unless the loan is being subsidized by the manufacturer you’ll more than likely get a better rate from a bank, or a third-party lending agency.

A car loan will most likely be for between 1-7 years, and perhaps surprisingly, they can even include a period of time when no interest at all is charged.

Once the interest does start accruing however, it will generally be between 7-14%, and if you decide on a shorter period of time, then you’ll pay quite a lot less interest, not just because of the shorter repayment time, but also because the interest rate will be lower too.

UNSECURED LOANS

An unsecured loan, by definition requires no collateral, but unless you have excellent credit, then the interest rate will be extremely high.

The best illustration of an unsecured loan, would be what is most commonly known as a personal loan, and not only does this kind of loan usually have to be paid off very quickly, but the interest rate will be around 12%, and if you don’t pay the loan back on time then the accumulated interest will escalate extremely quickly.

THE BOTTOM LINE

Which type of loan you apply for will depend on your personal circumstances, and also on what you want to buy, but before you make any final decision, please make sure that you understand exactly what you’re getting into, and how much it will cost you.

Introduction

Secured Loans have their place in the market. They might be advisable for people with bad credit ratings who are unable to extend their mortgage or for those who want to take out a large loan, particularly over a longer period. For people with reasonable credit scores they can also offer quite a low cost way of borrowing money.

The problem is that as a Secured Loan is, by definition, ’secured’ against a property they should be seen as a last resort for those at the bottom of the credit pile. This article will look at other ways of raising money or, at the very least, ways of reducing the monthly cost of interest on the money you owe.

Credit Cards Shuffling

There’s a myriad of Credit Card Companies out there and they’re all vying for your business. The reason why they spend masses of money on promotion and fighting for your business is because the Credit Card business is very profitable. For those struggling against debt signing up for another card or increasing a Credit Limit is one of the easiest ways to get extended credit, but please, please consider a few things before you do this.

The first thing to consider is, ringing up your existing Card provider and telling them that you have seen more competitive card rates and you are considering moving. Remember they spend a lot of money attracting new Customers and with any they already have they don’t mind losing out on a little bit of profit just to retain them. The people you speak to at the call centres have a reasonable amount of power to authorise a new deal.

If you have more than one card then the second thing to consider is transferring the balances to the card that will offer the cheapest interest rate. Gone are the days when Credit Card companies would only give cheap balance transfers to attract new customers – most now have ’special offers’ for existing cardholders too. One thing to check though is how the repayments will work on the card that the balance is transferred to. In a lot of cases you find that the monthly repayments will be geared to paying off the debt with the lowest interest rate, meaning that all new debt sits there attracting a higher rate of interest. (This used to happen a lot with the ‘zero rate balance transfers’ where in the long run the new credit card company made fatter profits on any new debt added to the card). To do this method just ask your card providers whether they accept balance transfers, what the APR will be and check that your credit limit is high enough to accommodate the transferred debt. Also bear in mind that if you have an overdraft you might be paying interest at a higher rate than a credit card – so it might be cheaper in the long run to get cash against a credit card and use it to pay off your overdraft.

The third thing to consider is to make sure that you always pay off the most expensive credit card balance (including your overdraft) first. For example, if one is charging you 16% and another is charging 11% then just pay the monthly minimum to the one charging the low percentage and throw any spare cash you can at the one with the higher rate. If your borrowings are significant, then so will the savings from simple following this simple exercise.

An Unsecured Loan

Although it probably won’t provide as much capital as a secured loan looking around for an unsecured loan prior to taking out a secured loan might be advisable. In this day and age lenders are less concerned about County Court Judgements and slightly adverse credit records, but one thing to watch out for is the advertised APR. Lenders advertise using what is called a ‘typical APR’, what this means is that at least two thirds of their customers are on average charged this rate. There are two problems here – one is that if you have a poor credit history they are likely to charge you considerably more than the advertised rate and the second problem is that you won’t know what rate they will charge you until they actually process your loan application. The problem here is that a ‘dirty great footprint’ is left on your credit history file for every search conducted on it.

There are another couple of things to watch out for when applying for an unsecured loan. One is the period that you take to repay the loan, repaying over a longer time might make the monthly repayments be more manageable, but you will pay much much more in interest for a longer period loan. Another thing is getting the money early – some loan companies advertise they will get the money in your account ‘the next day’ or whatever, but watch out for sneaky fees when they do this.

One last thing to mention is payment protection insurance (PPI). Loan companies make a lot of their profits from people signing up for PPI, but they don’t tell you all the details in the small print. Things to look out for are – there’s normally no payment made if you get a bad back or suffer a ‘mental’ illness. There’s sometimes no payment if you are made redundant within a specific period of taking out the insurance and some companies only use jobseekers allowance as a measure for you being unemployed. The problem here is that you might not be entitled to jobseekers because of a redundancy payment and even though you are physically unemployed the PPI doesn’t kick in. Other things to read in the small print are ‘no refund’ policies if you settle the loan early.

Mainstream Mortgage or Sub Prime Mortgage

This is where it gets even more complicated! You will find in the finance world there is no hard and fast definition of anyone or anything. For example, some writers and commentators call the ‘Secured Loans Market’ the ‘Sub Prime Market’ whereas others call the ‘Sub Prime Market’ the players in the mainstream market who take on risk adverse borrowers. For clarity, I would use the following definitions of the three different types of loans where you secure the repayments against your property. The first is a mainstream mortgage – this is a standard mortgage for borrowers typically with a good credit rating and they will probably get a reasonably low interest rate. The second is a sub prime mortgage – this is for people with a slight problem with credit – they may a history of missing payments or have had county court judgements against them – they will be charged a higher interest rate and will probably be ‘locked in’ to a mortgage for a fixed period (typically 3 years). The third is a secured loan – although there are sometimes reasons for people with a good credit rating to apply for them, they are typically for people with a poor credit rating and for people who have been refused money from the mainstream mortgage or sub prime lenders.

So now that’s settled, lets look at what the options for someone with a poor credit rating are. The first is don’t think that, just because you have a few bad marks on your credit file, you won’t be able to re-mortgage in the mainstream market. In recent times the increase in sub prime lending (including secured loans) has outstripped the main market and because of this, the mainstream market has relaxed its rules slightly on lending to people who are ’slightly risk adverse’. What this means is that if you have just missed a couple of repayments on you existing mortgage or have a country court judgement against you which is over, say, a year old you may be still be able to get a lower interest mortgage from the mainstream. Nowadays, mortgage lenders also frown less on people’s circumstances, so if you otherwise had a good credit history but it lapsed recently only through something like divorce or redundancy they might still consider you.

If you are refused a mainstream (or sometimes called prime) mortgage the next level you can try is the sub prime market. The sub prime market will take you on if you have a reasonably bad credit rating, but as with all things in life, there are things to be wary of. One thing is if you go directly to someone who deals exclusively in Sub Prime, they may be unaware of the offerings in the Prime market, so if you are negotiating a mortgage package always ask them what the prime options are and at the outset make sure you know which type of lender you are dealing with.

Be wary of the interest rates offered by Sub Prime lenders. In some cases their initial interest rate for the first three years or so may be less than a competitor, but always ask them what happens after the end of the three years. You sometimes find that part of the agreement of getting the Sub Prime mortgage is that they tie you in to a higher rated interest mortgage for another period after the Sub Prime one ends.

That’s not to say there aren’t one or two good Sub Prime solutions out there. Some lenders will review your situation at the end of the term and it is entirely possible that your credit rating will have improved enough for you to make the switch back to a Prime mortgage.

Debt Counselling

If you ever find yourself in financial difficulties it is well worth seeking some independent advice. As some of the explanations in this document more that prove – the finance market is a very complicated world and sometimes specialist advice is called for. In the counselling world there is the good old Citizens Advice Bureau (CAB) who have many sites scattered across the country and you can just pop in for advice or, more commonly, book a specific appointment, but there are also some less known bodies offering advice. There is the Consumer Credit Counselling Service (CCCS) and the National Debtline, both of these offer telephone advice and send out information packs and ‘budget planners’ to those in financial difficulty. Where they differ to the CAB, is that they specialise in giving advice to people with debt problems, and one little irony is that they are paid for by the Consumer Credit Industry.

Summary

It is always better to consider your options when taking out any loan, not just a secured loan. Other things you can do, not mentioned in this document, are talk to an Independent Financial Advisor, talk to friends and family and see if you can borrow the money, or see if you have any assets to sell that could get you over the rough period – you never know it might be shorter than you think.

But always think very carefully before committing to any financial transaction and always research what you are signing up to – and watch out for the small print.

When you buy a vehicle, a car, or an automobile you must not forget to get it insured. The auto insurance, motor insurance, or car insurance is meant for protection against losses incurred either as a result of a traffic accident or against liability that could be incurred in an accident.

In every country there are different laws for auto insurance as in some countries one must have an auto insurance of the automobile or car they own. In fact insurance of a driver is also a must in some parts of the world. Traffic accidents can occur anytime so auto insurance has its advantages. You cannot protect yourself from accidents but you can get protection against the losses.

If you take an auto insurance policy you may either get coverage for an independent item or one can take such a policy which includes all the items. The items included are insured party, the insured vehicle, third parties which includes car and people, third party which may include fire and theft, or No Fault Auto Insurance. The no fault insurance is the one in which coverage for injuries to persons riding in the insured vehicle is available without regard to fault in the auto accident. The policy of different auto insurance companies includes or specifies different circumstances or situations under which each item is covered. This can be explained with the example that an automobile or car can be insured against theft, fire, or traffic accident independently or separately.        

Most car dealers offer this facility; that when they hand over a car to you will get it insured. This facility is ideal for those individuals who do not like to do a lot of paperwork and are very busy with their work and other commitments.  

The premium charged by the insurance companies can be low or high depending on the age and gender of the car owner or driver. Auto insurance companies must have some logic behind this difference in premium for individuals of different gender and age groups. This is so interesting that unmarried drivers are charged higher premium then those who are married. The charges of premium also depend on the type of the vehicle i.e. for motorcycle it is low as chance of causing damage to other vehicles and automobiles is comparatively lower.  

First of all one must drive carefully, but since one cannot save him or her from accidents do get your car insured even if it is not compulsory in your country. On the World Wide Web you can easily find the details of what coverage is included or available in the auto insurance plans of your country. Whether you are a car or any other vehicle owner you must always keep this in mind, “safety first””!!

People always try best on their part to save their home against any damage and destruction but even then some things are not in control of human beings. Hence it is better if you take proper security of your home in situations of any mishaps by taking required home insurance cover.

Coverage is the main concern which you should take into consideration before buying any policy of Home Insurance. Insurance companies provide home insurance cover against any damage to your home due to some disasters and mishaps. Home insurance cover includes coverage given in the events of damage to your home caused by any calamity like flood, fire and storms. Home insurance cover can also help you in case of any damage done to your home due to riots and vandalism acts of people. Natural disasters are not man made and they can happen to anyone at any time, home insurance cover helps you in such circumstances to cope with the situation without any hassle.

Sometimes even the cover for home insurance also includes for emergency home repatriation. If due to any problem you have to leave your home then home insurance cover also provides for another home in case of emergency. Home insurance cover given by various insurance companies may be different for different home owners depending upon the safety measures installed in the home. If you have installed very good safety measures in your home like burglar alarms, smoke alarms, bolt-locks, and adding a urbane fire alarms that rings at the police, fire or other monitoring stations will help you to get better home insurance cover.

If you wish to get the full cover with home insurance then it will be most appropriate for you to research on the internet about the quotes for home insurance cover because internet is the only place where you can search and collect as many quotes of home insurance as you want. On the internet you will get very wide range of quotes defining cover for home insurance and so you can compare and select the quote that satisfies your requirements and is also affordable to you. But before opting for any quote giving extensive range of cover it is better if you get confirmation about the reliability of company. You can do it by checking online status of insurance company and can also ask from your friends and relatives.