Types Of Loans, Which Are Secured
Posted on February 8, 2008
Filed Under Uncategorized
A borrower when he pledges some assets of his own like car or property as a collateral for the loan, the loan, which the borrower is taking, is termed as a secured loan. A housing loan is a very common type of such loan when the financial institution who is giving the loan, is given lien on the title of the house as security by the borrower who is purchasing the house. The borrower will not get the title of the house till he pays back the amount in full. In case of failure on the part of the borrower to pay back the amount , the financial institutions will have the options and legal right to repossess the house and sell the same to recover the sums owing to them.
New and old car purchase loans are also secured in a similar manner as housing loan. The difference between the two, is the time period. In case of car loans, the time period of loan repayment is not only shorter, it is also corresponding to the useful life of the car. However, in case of auto loans , there are two types , direct or indirect. A direct loan is one where the loan is directly given to the car purchaser. In case of indirect auto loan, the car dealer acts as an intermediary between the bank or the financial institution and the car purchaser.
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