Secured Loans: cheapest lending of last resort

Former_MSE_Andrea · 3 September 2004 at 4:17PM

The following is the area to discuss or ask questions about the site article on secured loans.

Joe_Bloggs · 3 September 2004 at 4:45PM

I am confused.
If you take out or try to take out secured loan and have a mortgage them surely your existing mortgage lender has got to have a say in this.

In my view a mortgage is a secured loan based upon part or all of a property. If you are going to take out loans that give other parties a claim on the principal asset then you are inviting a conflict if a disaster should happen.

PS I do not wish to borrow money, but to learn of the pitfalls and benefits of the different types of loans.
J_B.

nitrocat · 3 September 2004 at 11:37PM

Interesting to know that secured loans usually have variable interest rates. Does this make the title possibly slightly misleading

“Secured Loans: cheapest lending of last resort”

as it may only be the cheapest lending of last resort if the rates stay low?

“Use savings: The interest paid on savings is usually far less than interest charged on borrowing, so paying off debts with savings makes sense.”

Is an excellent idea as long as the job market is good. If things look shaky in the future then wouldn’t having as big as a buffer as possible with savings (and clear credit cards) possibly be a better approach if there is a desire to keep the house?

Nitrocat.

MSE_Martin · 5 September 2004 at 4:17PM

Nitrocat to answer your question.

1. The title does make sense. The point is they must be used correctly. The reason the article has such an extensive checklist is secured loans are only a last resort in specific circumstances. A title is a title. My reason for writing this is many people just call up the TV advertised horrors - this way people will know when ti take them and how to find the cheapest rate.

2. Savings: Of course a cash fund is great IF you're debt free (excluding mortgage debt - though with a flexi mortgage even that is debatable). However the point is paying off debt with savings with a unsecured cards as back up is in the short term and money saver and the correct move.

Martin

Dan1974_2 · 10 September 2004 at 3:28PM

the mortgage lender does have a say . normally they have a restriction on your property which means that any company wishes to register a subsequent charge must get their consent. if you want any free advice without obligation regarding loans please feel free to contact me at {note: email deleted, this is a commercial loans company contact and therefore counts as a post for gain which is prohibited here}

I am confused.
If you take out or try to take out secured loan and have a mortgage them surely your existing mortgage lender has got to have a say in this.

In my view a mortgage is a secured loan based upon part or all of a property. If you are going to take out loans that give other parties a claim on the principal asset then you are inviting a conflict if a disaster should happen.

PS I do not wish to borrow money, but to learn of the pitfalls and benefits of the different types of loans.
J_B.

ksrao · 12 September 2004 at 10:35PM

My recent experience seems to be different.I have halifax mortgage and asked for a secure loan to buy a car.They qouted me 6.9% +£95 arrangement fee.I asked Lombard national the same amount as an unsecure loan,They offered it for 5.9% fixed and no arrangement fee. So in my case(with very good track record,a secure loan is costly and interest rate is variable!!!

MSE_Martin · 13 September 2004 at 5:30PM

Absolutely Ksrao, if you've a good score - secured loans should never be taken - unsecured is almost always cheaper - 'loan of last resort' as i say!

martin

jacobsdad · 17 September 2004 at 4:48AM

Hello all, I am 32k in debt - 11k high interest(store cards etc)5kHP(car)16K unsecured loans (1@10k + 1@6k) ..
I had a meeting with a consultant today who is from friendly mortgages # loans, he wants to put 16k on a secured loan and 16k onto debt management scheme has anyone out there done this - they are sending the forms out tonight and are eager to get them back, the loan would be 13.5% apr and the debt mnagement costs #£25 p/m???
seems like a good idea as I am struggeling with over 10 creditors and am in arrears with everything 6+ psyments, also am self employed and have a self cert mortgage which I have missed 2 payments on so I may be getting a good deal, I am alittle suspicious though..
help + advice would be apprecciated ++cheers.

Joe_Bloggs · 17 September 2004 at 2:22PM

Secured loans are usually cheap because they will take the security if you default. Your secured loan is not cheap it is extortionate.
Check out the MSE page:-
http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1094132767,59163,
At the bottom in the Debt Counselling section its lists a range of organisations that can help you reschedule your debts for free. Get your paperwork/facts together and try the local CAB first to see what they say as soon as possible.

Don't miss your mortgage payments as you will end up homeless and not have a secured loan option.
J_B.

Gig · 15 October 2004 at 1:18AM

I've had a lot of problems in the past (despite working for a building society - oops :-[) but I must say that in my experience, the CAB have been 1st rate. They won't judge you OR charge you for advice. Definitely go to them first.

While I'm on, does anyone have any opinions re using a secured loan to get me out of a car finance problem. I got myself pretty well sorted through the CAB (still have things on small 0% interest, payments ticking over etc) but kept on with my car loan. I've recently been made redundant however and whilst I need a car to work, I also need to cut cost. The way I see it is I'm damned if I do and damned if I don't, since if I keep paying, it'll just cost me a fortune for a few more years and if I get rid, I write off lots too.

[I'm really sorry if I should have posted my request somewhere else, but this is my 1st time]

Scrooge_McDuck_5 · 28 October 2004 at 10:54PM

These are really last resort products!!

Around 20 months ago I took out a secured loan with First Plus. After paying #300 per month for 20 months I was finally in a position to re-pay the loan.

It cost me aprox #2,975 more than the origional loan to repay this after month 20.

FP apply a early repayment charge which in the literature I was origionally sent was #19.46 per thousand. The actual charge I payed was #85.00 per thousand!

i.e. I payed the following (all approx);

20 x regular payments of #300 = #6,000
35 x #85 early repayment charge =#2,975
1 x #35,000 loan =#35,000
1 x Admin charge =#150
My total payments were approx #44,125

Most people (after 20 months) would expect to pay back less than the origional loan (not #9,000 more!).

The above represents my personal experience and oppinions. When I complained to FP they did not address my complaint as I requested.

AVOID THESE SERVICES AT ALL COSTS IF YOU CAN!!

If anyone has any advice on taking this further, please respond.

Secured Loans: cheapest lending of last resort

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