How Unsecured are unsecured loans?

gthull644

I ask this question because I have an unsecured loan and a few credit cards. These were mostly were used to finance a business startup. At the moment repayments aren't a problem but I did wonder what would happen if I was unable to pay these.

Supposing this business failed, I have a full time job which means I can pay the mortgage, but would not be able to make the other repayments. Could my creditors force me into bankruptcy which would mean I would lose the house?

As I understand an IVA, in the fourth year of the agreement I could be forced to take out a secured loan on my equity to pay off the balance of debts. If this is true, again these are basically secured loans.

Alternatively could the creditors force me to switch to an interest only mortgage?

Please help, I am confused (and a little worried).

CLAPTON

Better not to dwell on what's the worst that can happen but rather whats likely to happen in practice

Why do you think you may be unable to pay?

elop_htuos

Try to steer away from secured loans unless its the very last resort. They are extremely time consuming and you often end up paying almost double what you borrowed. I worked for a secured loan company soon to be leaving im prepared to now tell the truth about the actual products!

There are so many fee's which will be added however, when the sales person tries to obtain quotes for you they wont tell you that the property will need a valuation which will cost "YOU".....

Mass amounts of paperwork will need to be completed.....

If they try to say the quotes are on a free basis....DONT BE FOOLED!!!! Nothing is free from these companies and there will be fees included when you pay off the loan!

You will also have a credit search and the companies are legally required to read out data protection before the application is taken and also at the end of the application I know of people who don't complete this and nothing is said!

REMEMBER to explain that you don't want your details circulated otherwise the company will make money on your details to their third parties even if you end up not taking out a loan!

ALWAYS read the small print of the aggreement and quotes I've heard lots of companies (Including some of our lenders) adding payment protection on the quotes initially and only taking it off when the customer requests. Most payment protection schemes are a complete FAD and don't actually cover you for most things, they have ways getting around everything.


ANYWAY im sure you wont get into this situation gthull!

Good Luckkkkkk

jonesMUFCforever

Even unsecured loans can become secured!

Anybody can put a charge on your property for any reason - BUT they would have to go to court to enforce it.

Tootsie_Roll

ejones999 wrote: »

Even unsecured loans can become secured!

Anybody can put a charge on your property for any reason - BUT they would have to go to court to enforce it.

Exactly - I have been saying for years that there is no such thing as an unsecured loan. You may as well take out a secured loan at the start and benefit from a much lower interest rate. The rates on an unsecured loan are higher because they would have to do a lot more legal work to ultimately secure the debt but as we can see evidenced every day on the DFW board lenders and dca's are getting much cuter about getting charging orders these days.

Cantdance_2

Tootsie_Roll wrote: »

E You may as well take out a secured loan at the start and benefit from a much lower interest rate..

Excpet that most unsecured loans are over 20+ years rather than the stamndard 5-8 for an unsecured, so much more expensive in the long run.

Tootsie_Roll

Cantdance wrote: »

Excpet that most unsecured loans are over 20+ years rather than the stamndard 5-8 for an unsecured, so much more expensive in the long run.

There's no reason you can't take one out for 36 - 60 months the same as an unsecured loan.