Adverse secured loans are loans made available at higher
interest rates to people who have a less than perfect
credit history for providing collateral against the loan
advanced. These borrowers do not qualify for the best
market interest rates because of a deficiency in their
credit history. An adverse credit history usually means
that the borrower has a history of County Court Judgments,
defaults, missed payments on a mortgage or secured loan
arrears or non-payment /arrears related to some unsecured
credit.
Lenders give out adverse secured loans at premium rates
i.e. at much higher interest rates to compensate for being
exposed to a greater risk by lending to a borrower with
adverse credit history as compared to the risk in a loan
given to a borrower with a good credit history. Adverse
credit is also known by other terms like bad credit, poor
credit or sub-prime. Sub-prime refers not to the interest
rate charged on the loan but to the credit status of the
borrower.
Sub-prime lending is called predatory lending as lenders
disburse these loans fully understanding that such
borrowers may not be able to meet their repayment
obligations and would default on the loan. They realize
that this will give them an opportunity to foreclose and
seize the collateral. Lenders usually required a borrower
to pledge his/her home as collateral against an adverse
credit secured loan. Sub-prime lending forms a sizeable
portion of the UK secured loans market. Experts opine that
properly disbursed adverse secured loans are a boon for
families with less than perfect credit histories. Wrongly
done, they are a huge rip-off siphoning wealth and hope
from people with very little to begin with.
There are no fixed criteria for the approval of an adverse
credit loan as different lenders take a different view of
the reasons for the bad credit of the borrower. Nearly all
lenders consider CCJs, but many will ignore them if they
have exceeded a certain age. Some ignore payment defaults
altogether. One major factor affecting the approval of an
adverse secured loan is the way in which a secured loan
account (if the borrower has one currently) has been
handled over a particular period. This factor can also
influence the rate at which the loan will be offered, if
approved, as this affects the degree of repayment risk
associated with the loan.
With so many factors affecting adverse secured loans it
becomes extremely difficult for an average borrower
standing in need of such a loan to find one that ideally
fits his needs and individual situation.
As such, it would be best to seek the services of a good
secured loan packaging company. They are aware of the
approval criteria for a variety of lenders and can save a
borrower a lot of time and hassles.
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Graham Bradlington is the marketing manager for Quickly
Finance Limited, a company which specialise in Fast track
Secured Loans & Remortgage for homeowners. Quickly Finance
is 100% independent & can search the whole market for the
best deals. For more info: http://www.quicklyfinance.com
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