A personal loan with a collateral is known as a secured personal loan. This is usually a low interest loan with a title of an asset attached to the loan. This is risky for the borrower because in the event that there is failure to pay the loan, the asset will be seized and sold to pay off the loan.
What are the acceptable forms of collateral?
- A car title collateral
- A house
- Rental property or estate
- Investments or stocks
- Any valuable property
If you are living in your home and you use this as a collateral, you have to be careful to make the payments on time or you end up without a house to stay in. As with any forms of loan, this should be paid scrupulously and on time. Do not borrow more than what you need. For example the value of the property is R500 000 and you only need R 300 000, do not borrow the whole amount.
What are the other alternatives to not having a collateral?
You have to make sure that you have the right habits and mindset in getting a loan. This is a big responsibility and with the risks involved, you have to think twice or thrice. However, all things considered, you can get a loan if you can deal with the interests and payments.