Comparing secured loans offers’ can seem like a daunting task in the beginning.  There are so many factors involved to selecting the right secured loan for your needs.  Lets give you a primer and take a look at some of the common elements of a secured loan so you can compare secured loans and get the best deal on your loan.

Interest rate
When people evaluate secured loans, the interest rate or APR is the first thing most will look at.  While it is obviously important to get the lowest interest rate, there are many other factors you need to look at to get the full picture.

Variable or fixed interest rate
There are two types of interest rates, variable and fixed.  A variable interest rate will rise and fall along with the market and the economy.  If interest rates go down, your loan interest rate will also go down, giving you cheaper monthly payments.  Beware though, if interest rates go up, you will be paying a higher interest rate.

A fixed interest rate is as stated.  It is fixed for a certain period of time.  This way you can be sure of the monthly and overall costs of your loan.

Introductory rates
Is there an introductory interest rate deal?  This is where the first year or two gives you a much cheaper rate of interest.  Then when that period ends, the rate will revert to either a higher fixed or variable rate.  Make sure to understand the details of this type of loan, it may look cheap in the beginning but can you afford the payments later after the cheap rate is long gone?

Loan term
The term is the length of time you will have to repay your loan.  Your monthly payments will be based on the loan term and the interest rate.

Monthly payment amount
This is the amount you will have to pay to service the loan every month.  As noted above, if you have a variable rate, your monthly payments will go up and down with the markets.  If you need certainty for the amount you owe every month, make sure your interest rate is fixed.

Total repayment amount
This is a commonly overlooked factor when taking out any loan.  You need to understand what the entire payment amount will be including interest, principal and all fees.  Only by adding in all charges and costs will you be able to find out the real cost of the loan.

Loan fees and costs
Many loans will have at least some sort of fees and costs.  Make sure you ask and understand what all the fees and costs are going to be.

Payment protection insurance
If you are injured or disabled and no longer have regular income to pay your secured loan, you could lose your house if payments are not made.  There is special insurance for this and you can evaluate the costs and risks to decide if you need this or not.  This should be considered as part of the loan total cost when you evaluate the secured loan deal, if you take this option.

Ease of access to the money
You need to understand exactly how you will get access to the loan funds.  Will it be wired to your bank account, will it come in installments, will you get a debit or credit card that can access the money.  Ask how and where you will get the loan money once approved.

Overpayments
If you foresee extra income or savings, you may want to make additional amounts on top of your monthly payments.  This will pay off your loan much sooner as it will be paying the principal of the loan directly and not going towards interest.  You will want to understand if overpayments are allowed and if there is a fee to make overpayments or not.

Early loan repayment
This is the ability to pay off the entire loan balance earlier than planned.  With some loans it is allowed and some loans have a fee to do this.

Payment holidays
Some loans have the ability to take a payment holiday.  This means that you get one or several months where you don’t have to make the loan payment.  Check for availability, terms and if there are any penalties for taking a payment holiday.  Obviously, not all loans have this option and some loans charge a higher interest rate for secured loans with this and other features.

Other loan terms and conditions
When taking a secured loan or any loan, you need to read and understand all of the terms and conditions of the loan.  The loan terms will differ for each loan so set aside some time to read through and evaluate the terms.

There you have it, this should be a good start for you to understand how to compare secured loans.  You should also use your common sense and logic to ask questions and  understand all aspects of the secured loan.  After all, you may be paying back the loan for many years, make sure it is suitable for your needs and that you are happy with everything before taking the loan.

If you are looking for a loan, we can help to compare secured loans from many providers.  Fill out the free loan quotation form on the right side of the page and a loans expert will get back to you with the best deals and advice that you may need.  It is free and there is never any obligation.

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