Giving Collateral to Receive a Personal Loan

Secured loans also known as collateral loans are risky personal loans for anyone with bad credit. These collateral loans are offered by banks or other lending companies. Anyone who gets a secured loan should be conscious that the creditor will take their collateral if they default on the loan. Lower interest rates personal loans are usually given to people who receive collateral loans because if they neglect to repay back the loan, they lose their collateral.

Collateral Alternatives

Stocks and bonds are typically given as collateral to ensure the loans from the banks. You can also decide to put forward your house or property as collateral but there are a couple of things you should know. A loan might end up defaulting and you may have to sell the home or property just to pay back the borrower even if you only put up a part of the house or property. Try another personal loan option if you are still living in your home because you could end up losing your property.

Once you agree to the value of the collateral and borrow that amount, any shifts in collateral value will have to be made up by you. If a part of your estate was valued at $50,000 and dropped in value to $30,000, you would still have to make up back $20,000. The property is now just valued at $30,000 to the bank. And since you borrowed $50,000, you still owe $20,000 to the lender. You lost your property because the value of the property dropped.

In order to keep the previous scenario from happening, it is recommended not to borrow the whole value of the collateral. Only take up what you require and adhere to things that you are willing to part with, just in case you do fail to pay back the loan. Even if you just borrow what you require, remember that you will always end up paying more than the original amount due to the interest rates.

Collateral Needed For a $30,000 Loan

A $30,000 dollar loan is not something that one can obtain without a collateral of similar value. In these instances, items that might be similar in value are,

• An expensive car title collateral
• A house
• Rental property or estate
• Investments or stocks
• Any valuable property

The following were just a few things that make up collateral and as long as you have things that have immediate resale value, most banks will accept it as collateral for a personal loan. If you have good credit, you may be able to get a $30,000 loan without collateral and even obtain low interest rates, sometimes in the range of 6% to 8% or better. If you have midrange credit, then expect more scrutiny in your repayment abilities and interest rates in the range of 19% to 20%. These rates are not guaranteed and can change with the credit environment.

If you have no collateral but hold a steady employment, you should opt instead for a payday loan.