Understanding Secured Loans with LoanMart

VAN NUYS, Calif., Dec. 11, 2023 /PRNewswire/ -- As the financial fabric of the United States experiences a shift amid inflation, some Americans may turn to secured loans to handle pressing financial obligations. Regardless of the intention behind the credit application, understanding how secured loans work is integral to making informed decisions and promotes financial literacy. LoanMart believes in the power of financial literacy and its impact on the average American.

Take a closer look at some of the most common types of secured loans.

Home Equity Loans

Through home equity loans, homeowners can tap into the available equity of their homes to obtain funding and handle pressing financial obligations. Essentially, through a home equity loan, a home is offered as collateral for the loan, so the lender has a form of security in the event that you are unable to keep up with your payments and default on your loan. Home equity loans are often referred to as second mortgages, and the funding that a borrower obtains from this type of secured loan can be used to finance home renovations, handle unexpected expenses, or consolidate credit card debt.

Auto Loans

Auto loans are arguably the most common type of secured loan and are used by applicants to obtain new, used, or certified pre-owned (CPO) vehicles. Auto loans are secured by the vehicle that the applicant is financing and are repaid in monthly installments over an agreed-upon period of time. Interest rates on auto loans mainly depend on the applicant's credit history and the current economic climate. The Federal Reserve sets the baseline rate on which auto loan lenders base their rates.

Title Loans

Car title loans are also known as title loans, auto equity loans, or pink slip loans. As the name would suggest, title loans are vehicle-secured loans that allow qualified applicants to borrow against the value of their vehicles. A borrower will pledge their car, truck, or SUV's title - which typically needs to be paid-off at the time of the loan application - as collateral for the loan and receive funding to handle unexpected expenses. Title loans can often cater to subprime borrowers who may not be able to access traditional loan options due to their credit histories.

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SOURCE LoanMart