It is not farfetched to use your existing assets to secure a loan for subsequent asset purchase. So, if you are looking to purchase a personal asset, this is one option you can maximise – personal secured loan.
What is a Personal Secured Loan?
A personal secured loan functions in a way that you use your properties as security for the money you get from a lender. If you need to carry out a non-business project, but you do not have the money, secured personal loans may be all you need to break out of your financial hardship.
The good thing about a personal secured loan is that enough time to pay back, usually between one and five years. Another thing is that you get your loan at a low rate. This is because of the security that reduces the lender’s risk. Also, you might be able to get a high loan amount. This, again, is because of your property used as security. Most times, the amount of your loan depends on the value of your property.
Types of Personal Secured Loan
There are various categories of personal secured loan that you can take advantage of. They include:
This is a loan arrangement that helps you purchase a property on the mortgage. What you use as security here is the property itself.
Car Title Loans
Here, you use the title of your car as security for the loan you collect.
Are Personal Secured Loans Taxable?
If you are worried about whether the government will tax your secured loans, relax; let’s explain to you how it works out.
The government does not consider the loans you get as your income. It wants you to repay it quickly, so it does not tax you on your personal secured loan.
The only instance where you get taxed on personal loans is if the lender cancelled your debt, and you no longer have to repay your debt. This is no more a loan, and, as such, becomes taxable.
What Happens to My Property If I Am Unable to Pay Back?
When you get a personal secured loan, you give the lender assurance of something valuable to fall back on if you are unable to pay back; and that is your property used as financial security for the loan.
So, if you are unable to pay back, the lender will take over your property. If your property’s value is more significant than what you still owe, it would be valued, and you will get the excess monetary value.