A secured loan is quicker to avail than an unsecured one. Lenders do not require the secured loan seekers to undergo a trying and tiresome process because they take some pledge as a mark of security for the granted loans. Evidently, the process to borrow secured loans is more flexible that that to secure unsecured loans. It is not the only reason why people go for a secured loan. The benefits of a secured loan are among the reasons.
Major Benefits of Secured Loans
Initial repayment holiday is a benefit for the borrowers of secured loans. A secured loan comes with an initial repayment holiday. It does not require you to pay any installment for a period of about five months. It is enough time to arrange for your repayment. You will have to pay interest for a definite period of years. You can also benefit from the freedom from the fluctuation of interest rate.
Balloon repayment is another major benefit that secured loans promise. You can repay a chunk of the principal or borrowed sum in advance irrespective of usual monthly repayments. This option is handy when there is excess cash in your hands. Repayment of a part of the loan reduces the interest rate and the number of installments. In case of illness, unemployment or accident, the insurance company will pay the loan installments on your behalf.
Worse Consequences of Defaulted Loans
A defaulted loan is better understood as an unpaid loan. It is converted into a debt that hangs like a millstone around the borrower's neck. As the worst consequence of defaulted loans , the borrower ends up sinking into a state of bankruptcy. Bankruptcy is a severe stigma on the professional and social reputation of a person. Under such financially unfavorable circumstances, the borrower finds it almost impossible to avail another loan. Only another loan can get him relieved of the bankruptcy.
Debt Consolidation to Get Rid of Defaulted Loans
A defaulted loan casts a severely negative impact on the credit report of the borrower. Having a negative credit account, he cannot find any lender to grant him loan. One way to tide over the consequences of defaulted loans is consolidating the debts. By means of debt consolidation, you can get rid of your debts. It results in a number of benefits for the person who is down with an unbearable load of debts. You can knock at the door of a debt consolidation service provider.
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