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Finding a loan with bad or fair credit can be like finding a needle in a haystack. There are a number of challenges that you will face if you go around looking for a traditional loan without rectifying your credit record. The first problem is that you will not get approved for the loan itself and the second issue is that even if you do, you will have to pay a huge rate of interest which will not just justify borrowing the money. But there are other options which are much more financially sound given that you can make payments on time as agreed upon in the terms and conditions.

These are called secured loans. A secured loan is a loan which is given to people with bad credit or even to people with good credit who are looking for a better interest rate. Secured loans will use personal property as a security against the loan amount. The interest rate will depend on the value of the collateral that you use to secure the loan. The higher the value the better your interest rate will be. But apart from the value of the loan, the lender will also want to know whether he can sell the security with ease if the need arises. This will also be a big factor in deciding the interest rate and the terms and conditions of the loan.

Collateral is something that you use to secure the loan. Most loans are self secured, this includes auto loans and housing loans. But housing loans are no longer secured because evicting a family from a house can pose a lot of legal problems for the bank if the need arises. If the loan that you take is purely cash, then you can secure it with a possession of yours. This can include gold jewellery, the deeds for an estate or art work or any other valuable. Real estate is very good collateral because banks know that traditionally their value keeps rising but lately gold has become the Numero-Uno collateral in financial circles.

When you start looking for a loan, take your time to understand the various options. A loan is something that you are going to be burdened with for a long time and hence you need to make the right move at the beginning. Use the internet to your advantage to make your search easier. Talk to your personal bank officer to find out if they have secured loan options, a lot of banks will not want to have to deal with the hassle of storing something physical in a locker to ensure that you repay your loan.