Secured loan not so secure???

T0mmyh

davidmcn wrote: »

But they've never had a security - he could have spent the money on coke on day one!

He could do that if it's secured or not. It being a secured loan doesn't limit what you can actually spend it on, just that if you don't pay they can ultimately force you to sell your house

G_M

and anyway there's only so much coke any one person can drink.

silvercar

If they gave you the loan based on it being secured, they would have charged a lower interest rate than an unsecured loan. They could try and secure the loan now, based on the fact you signed the paperwork agreeing to it being secured.

mo786uk

He has sold the house now so there is nothing to secure.

If he now spends all that money on coke and has no means to pay it back the finance company will no longer have an asset they can sell to get the money back - they will be relying on OP getting it from somewhere else.

steampowered

If the loan was never secured against the property, it was never a secured loan.

Company 3 will simply be an unsecured creditor.

3. Does Company 3 have any recourse if I DON'T settle the loan and keep making my monthly payment?

What is the nature of the monthly payments - are you in arrears?

If you are simply making your standard monthly payments, company 3 won't be able to accelerate the payments. But if you are in a payment plan I suppose they may be able to ask for more.

To be honest if company 3 has agreed the monthly payments then I can't see why you would need to pay them off early (although paying them off early may save you interest).