If you’re getting a loan, you should know that you have two options: the secured and the unsecured loans. Unlike an unsecured loan, which is more ubiquitous, a secured loan is more prevalent among people who are financially conscious and always believe that money matters should be approached with prudence. 

It is also an excellent solution for aspiring entrepreneurs who want to start a business or expand their business, yet have a poor credit rating. Property investors, however, should seek advice from experts who offer finance and home loan analysis, before proceeding to acquire a secured loan. Think Money is one such expert program. Take a look at the numerous benefits that a borrower can enjoy from securing his or her loan, as opposed to getting unsecured credit from lenders.

Benefit 1 – You Can Get Higher Amounts and Lower Interest Rates

A secured loan is one that has an asset pledged against the possibility of a default, or when you’re unable to pay the terms certified by the agreement. This pledge, called collateral, means you’re giving the creditor the right to seize your asset if you’re unable to pay the borrowed money back.

Often, Debt.org explains, creditors will prefer assets that have values higher or equal to that of the loan amount for which you’re applying. This is for security on their part – the asset value almost guarantees that they can recoup the money that they’ve let you borrow even if you’d end up unable to pay off the credit.

Since there’s a considerable amount of risk for you, you can negotiate more flexible terms of credit in a secured loan. You can make sure that you are charged affordable rates, in other words. Lenders will be more than happy to work with you on that because the collateral makes them more confident of your ability to repay.

Benefit 2 – You Can Borrow Larger Amounts

Since the collateral instills confidence in your repayment capabilities, you can also negotiate for more massive amounts of credit from the lender. Of course, this will depend on the actual value of your collateral. Before your loan gets approved, the lender will require you or will put it upon themselves to obtain a fair value assessment of the property you secure your loan against.

Borrowers typically pledge their automobiles, their homes, or commercial properties as collaterals when getting a secured loan. These items have significantly higher values – at the higher tier of 5-digit amounts. Since you can get a loan up to 90% of the value of the security, that translates to relatively high loan amounts.

Benefit 3 – You Can Start a Business With a Secured Loan

Most of the people who acquire a secured loan are businessmen, and people who have plenty of high-value properties that they can use as collateral. If you value money and are interested in investing in a business, taking out a secured business loan is the way to go. It’s riskier to take an unsecured loan to start a business because your credit rating will suffer if you default on these debts. You’ll find it challenging to take out a loan over time, a situation that can be difficult for yourself and your business.

While a secured loan is an excellent option for business, the case might be slightly different if you want to take out a secured loan for property investment. So be sure to consult with professional property investment strategists who offer a comprehensive program for all things related to property and finance. Think Money is one such expert strategist.

To summarize, there are three reasons why a secured loan is more advantageous than an unsecured one. First, you can negotiate terms that are easier to repay. Second, you can borrow more significant amounts than you could with an unsecured loan. Finally, the vast amounts can be used to start your journey on the path to financial independence through wise investing.