Have you been turned down time and time again for an unsecured loan? You might still be able to have the loan you need by applying for a bad credit loan by using collateral. This type of loan is called a secured loan because it is secured by some kind of collateral. The collateral assures the lender that you are going to pay the loan back. If the loan is not paid back in a certain amount of time then the lender will have the right to keep your collateral, and sell it for the repayment of their loan. A secured loan is designed for people with no credit history or who have had past credit problems. The benefit of a secured loan is that, because the loan is guaranteed, the loan will probably have a very low interest rate, much lower than what a loan without collateral would have.A lender usually requires that the collateral be some type of real estate and in some cases an automobile. The collateral usually needs to be of greater value than the amount of the loan you are requesting. Generally speaking you don’t need to leave your home, or stop driving your car, if it is being used as collateral. Usually the only requirement is that you sign a contract that gives the lender the right to the title of your vehicle or home should you not be able to pay the loan back. When you are in default of the loan, the bank can either repossess (take)your vehicle or foreclose (take) your home.Although most lenders will only use vehicles or real estate as collateral, there are some lenders who will use jewelry, collectibles or rare coins as collateral. Although when a lending institution uses any of these items as collateral, they will usually hold the item for the duration of the loan. If the loan is not paid, then they are usually taken by that institution.Finding a Bad Credit Secure LoanMost high profile lenders such as banks will only take real estate as collateral for a secured bad credit loan and do not deal in second mortgages. Smaller finance companies that deal with secured loans can be found on the internet or in your local yellow pages. Newspapers are also a good source to start your search. Make sure you shop around and compare prices and terms of repayment with different finance companies. There are many sites on the internet that provide you the opportunity to request a quote from several lenders at the same time at once.As a general rule when you submit a request for an online loan quote, many finance companies will get in touch with you. That is actually a good thing because that way you will get a better idea of what each company has to offer, and then pick the appropriate one for your needs.
