Secured Loans generally come from 3 places – You either get the loan from a traditional lender, like a bank, a nontraditional lender, like an organization dealing specifically in secured loans, or a small, local business, like a pawn shop. Each of these lenders has pros and cons, and each should be thoroughly researched (as with anything else relating to your finances) before you come to a decision about how to take out a secured loan.

First, a quick explanation of what a secured loan is: Secured loans are similar to normal, traditional (unsecured loans) – you find a lender, borrow a set amount of money, and you pay it back over time with an already agreed upon interest rate and payment plan. However, with a secured loan, you also have to bring an amount of collateral to the table. Generally, the value of this collateral needs to be greater than the money being lent. This collateral will be used as a security blanket for the lender – if you should decide to stop paying them, they simply take possession of the collateral, and sell it to cover the money you owe them. Again – this collateral is generally worth more than what you borrowed in the first place, so its not a good idea to default on a secured loan.

Getting a secured loan from a bank:

Banks are the most common place you’d expect to get a loan – this is where most loans are handled. Car loans, mortgages, business loans, your local bank branch likely has employees who specialize in assessing risk and making lending decisions in all of these fields. Traditional banks, however, tend to have less experience (and confidence) in secured loans. They can be very helpful in a common secured loan situation, such as a second mortgage on your house (where the capital you’ve built up in your home serves as collateral), they are far less helpful if you’d like to put up your dvd collection so you can buy a vespa. You get the idea. Banks are great at handling loans, and they handle the few secured loan situations they’ll take much like they handle any other loan – there is a lot of paperwork, interest rates are generally reasonable, and there’s a good chance they’ll turn you down anyway. One great advantage to banks is that you can generally trust them. Read the fine print, of course, but you aren’t likely to discover you’ve gotten yourself into something too unfair.

Getting a secured loan from a dedicated lender:

Establishments dealing specifically in short term and non-traditional lending can be more helpful and more flexible in your search for a secured loan. These organizations are built around the business banks aren’t interested in taking, so they can be much more accommodating to your plans. Keep in mind, however, that the banks didn’t want this business for a reason – and the lender you’re now dealing with is more likely to hit you with unexpected fees and high interest rates. Make sure you read the fine print here – you’re dealing with a business that is far less reputable than the bank, and occasionally they’re not afraid to try to pull something over on their customers.

Getting a secured loan from a pawn shop or other local establishment:

If you need quick money for a speeding ticket, or bail, or (heaven forbid) he latest tech gadget, you might try your local pawn shop. They’re happy to appraise your valuables, hang onto them, and loan you an amount based on their appraisal. They can be quick and painless to deal with, but keep in mind – their appraisal is unlikely to be anywhere near what you’d value your goods at, and they have no problem keeping your stuff if you don’t pay them back in a timely manner. On top of that, since these loans are generally short term, you’ll often find yourself paying rates of 300% annually or higher. Not a wise financial move in the long run.

Whatever your needs, you can find a lender to accommodate you if you’re willing to look. Make sure to shop around and do your homework, and you’ll come out on top.



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