Secured Loan Resources

When you’re looking for a fast way to access more money in order to finance an important purchase or maybe consolidate your debt, you’re pretty sure you need a loan.


However, the different aspects and the fairly complex nature of what these different loan packages can mean to your finances means that it is generally a good idea to do a bit of research of you own.

Before making any decision, it’s recommended to understand a bit about what you’re getting yourself into, and what the best option for you could be, if any. With this in mind, we have provided you with these resources:



Also, to better understand the specific terms and rules that will become very important to you in the future, you should read these short, introductory articles on two of the most important aspects in financial matters, collateral and liens.

Collateral

Collateral is the term that is generally given to tangible assets within a financial transaction, which might include things like: inventory, real estate, items and equipment, physical things in general, that are valuable for a business standpoint. Sometimes the term collateral might be applied to things like company names and patents, these things being known as intangible assets, as in they have an abstract, non-materialistic value.


This term can be used when referring to anything set forth in a loan agreement as a guarantee. For example, if organizing a secured loan, one might be required to name the collateral which the loan is being requested for, or is in place of.


This guarantee will therefore be verified and analysed. Regardless of the amount or type of collateral being processed for the loan, the person doing the lending will almost always ask for a third-party appraisal of the assets in question, so as to get an estimate of the collateral value (and if it matches the value the value of the loan it guarantees for or not). Most often, this is done by a government supported appraisal firm.


So, collateral is used in lending agreements and can be seen as the borrower’s pledge for a certain type of property. This asset is used to secure the repayment of a loan, or a guarantee that the loan will definitely get repaid, if you will, as it serves as protection against the borrower failing to pay the borrowed amount (plus any interest that might have been incurred along the way).


If the borrower cannot complete payments on the loan, then they forfeit whatever collateral was stated upon the initial loan agreement. If the borrower fails to make the payments he has agreed to, he effectively hands over his collateral to the creditor, allowing the latter to recuperate his losses. This is why creditors will always prefer secured loans.

Liens and things

A "lien" is what is referred to in law as a security interest which is given in accordance to a piece of property or a possession. In order to secure the payment of debts or loans such as secured loans, a lien is used. A lien is the formal right of keeping possession of a property belonging to another person, until the debt owned by that person is discharged.


This is used as a form of collateral within formal loan agreements. The person that owns the property/possession in question is the person that will grant the lien and is usually referred to as the "lienor", whereas the person that stands to benefit from the lien is called the "lienee".


The word stems from both Latin (ligament, ligare: to bind) and Anglo-French (lien, loyen: bond/restraint) and is generally used to refer to the passive right to retain (but not sell) the property in question until the issue (be it a debt or a loan) is fulfilled and the matter is discharged. It indicates property that can actually be possessed and used.


When the property is lost, the lien is released. There are also what tend to be known as "equitable liens" which are similar to liens, of course, but in this case, an equitable lien refers to a non-possessory security right as opposed to a possessory right.


For example, in relation to the sale of land, if the seller goes unpaid then they have equitable lien over the land in question for the purchase price, regardless of whether the buyer has gone into occupation of the property or not. This case is however quite rare.