When you try to get a personal loan from the banks, you may notice the bank customer service will try to persuade to choose secured personal loans over unsecured loans. You know, when you insist on an unsecured personal loan, the interest charged goes up by 10% and you must repay the entire loan in half the time. Many people dissent such manipulations and think that the banks are trying to cheat them of their homes and cars. Actually, lending money is always a risky thing, how many times have your kissed your dollars goodbye when a friend or relative asked you for a loan? While you can absorb that loss and write it off as bad debt or a poor judgment of character, you do not face hundreds of people asking you for a loan every day. Banks are set up to earn money by making profitable loans with carefully managed risk and returns. They prefer granting secured personal loans because the lower risk profiles of such borrowers to default on the loan. When they have to take more risk in loaning out money, they request for a higher return or interest rate which is simply fair and square. Actually, having to repossess the properties of loan defaulters make the whole business troublesome as there are many administrative processes and fees involved which erode away the so called profits of liquidating borrowers' properties and claiming all for themselves. Only in the extreme cases where the debtors show no intention or ability to repay the debt over any tenor would home foreclosure be used. That is why many well informed and financially savvy homeowners choose secured personal loans even though their good credit records allow them to have access to unsecured personal loans.

There are many advantages to using secured personal loans. First of all, these are the banks' preferred customers. You get faster service and prompt loan approvals, lower interest rates, negotiable repayment schedules etc. For people with bad credit, secured personal loans may be the only source of financing as they will be rejected for unsecured loans based on their poorer creditworthiness. However, some people fear losing their property used for secured loan collaterals if they are unable to repay the loan regularly. Actually, with their property at stake, it serves as an incentive to be conscious about punctual loan repayments so that you can enjoy the lower interest rates by being a low risk customer of the bank. And when it comes to the actual loan repayment, you will find it easier to repay secured personal loans because of lower cost and increased flexibility granted. For example, blind apprehension of losing their homes through bank repossession may edge borrowers into insisting on high interest rate unsecured personal loans but when they start having trouble servicing even the minimum monthly loan repayments; eventually they still end up having to use their house as collateral for a second mortgage to help cover the earlier debt. This mistake of choosing the wrong loan type right from the start costs them a lot of money over loan payments.

At typical APR ranges of 6% to 25%, the loan interest rate is always the lowest for secured personal loans compared to other forms of unsecured personal loans. The actual APR is determined by the value of the asset pledged as secured loan collateral. Using home and real estate properties will get you the lowest APR while your car and automobile titles will be second tiered. Besides the APR, the loan amount is also determined by the value of your secured personal loan collateral. Since most homes are worth a lot more than other collateral types such as autos, you need to use that for borrowing large sums from secured personal loans. Because the effective interest fees are larger, using home collateral helps you qualify for the lowest APR secured personal loans and that will help further reduce the amount of interest you need to pay. Most borrowers use the secured personal loan proceeds to service higher interest rate loans such as credit card bills, debt consolidation, as well as any large sum expenses like weddings, home improvements and new car purchases etc.

If you think that is all to the advantages of taking secured personal loans, even the repayment options open to secured personal loans borrowers are more flexible and smoother compared to unsecured loan borrowers. Banks and lenders are willing to negotiate on the repayment terms to suit the secured personal loans borrowers so that they can win their business. They may even provide financial and loan experts to study and analyze the borrowers' financial status to create a feasible repayment plan for the disbursal of the secured personal loan so that the borrowers will be able to enjoy the loan without any worries about losing the pledged collaterals. Although secured personal loans do have some disadvantages, these can be worked around by proper financial knowledge and planning on using the funds made available through various personal loan options.