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Applying for a Secured Loan 101

If you’ve made the decision to apply for a secured loan, you’re likely to have done a bit of homework in regards of current interest rates, traditional fees for preparing the necessary documents, and of course, the fee your lender will charge you for your secured loan. If you have yet to accomplish the above tasks, you should at least begin the process before you begin to contact potential secured lenders. So here’s a bit of basic info for you (and if you’re already familiar with it, let’s just consider it a refresher course, shall we?).

The most common type of secured loan is a mortgage; one of the largest bills that you will ever have in your life. There are a wide variety of fees in all shapes, sizes and colors for you to decipher through, so be sure to pack your x-ray goggles!

First things first, we have the APR – it’s the amount that you will be paying each year for your loan. Also known as the Annual Percentage Rate, it will include the interest rate, fees, and certain other charges calculated on a yearly basis to come up with one complete percentage. It’s usually a bit higher than the interest rate that you’re quoted, as it includes the other fees.

Be sure that you know the terms for “fees” as many of them can be hidden or covered up as something else. “Points” are one of the more popular fees, and can range in purpose to get you a lower interest rate to an honest loan officer telling you that’s how he’ll fill his paypacket. When in doubt, ask questions! If you’re not happy with the answers you received, ask someone else. Ask all the way up to the president of the company, as this is your money we’re talking about here. And don’t sign anything that you’re not 100% sure about.

And last but not least, be sure to shop around- don’t put all of your eggs into one proverbial basket, so to speak. There are, unfortunately quite a few bad loan originators (often referred to in the industry as “predators”) in the secured loan industry that are completing the old “Bait and Switch” routine on you- promising the moon and stars to you, their special client, but all the while they have no such program waiting for you (and you are now in a difficult position: either choose the horrid loan program that you got switched into, or no loan at all). By shopping around, and informing the competing lenders that they are not alone, you are setting yourself up for an ideal, winning secured loan situation.

When the application process commences, it’s very important to remember that you can change your mind at any time without penalty or fine. Sometimes our gut instinct tells us something that we just can’t avoid, and it’s often best to listen to our gut