When you are a retired senior, the last situation you want to deal with is financial hardship. Many seniors were hit hard by the economic crash of 2008. Additional financial hardship has now been created by the raging pandemic. Luckily, secured loans are common financial solutions for any type of person in need, but there specific secured loans available to help seniors.
If you are a senior, you may need financing help due to bad credit or depleted savings accounts. Or, you may need a secured loan for pragmatic or constructive reasons, including home improvements or helping family members finance educational or major life endeavors. Read ahead to learn helpful information about secured loans for seniors.
Secured loans are monies loaned by a private or corporate financial institution and secured by collateral of some kind. These types of loans tend to work well for both the lender and borrower. This is because lenders get a guarantee of repayment and borrowers receive funds for whatever purpose needed. Secured loans also tend to have lower finance charges than unsecured loans due to a reduced risk of default as guaranteed by the aforementioned collateral.
These loans are paid off over time in monthly payments, which are called installments. The affordability of the minimum monthly payments due is assessed during the application and approval processes. Paying a secured installment loan off over the full course of the loan term helps keep monthly expenses to a minimum. Alternatively it is possible to fully satisfy the balance of a secured loan prior to its last payment and final due date. This is accomplished by making payments above the minimum required amount each month, which reduces the total cumulative finance charges and results in money saved overall.
The finance charge, or interest rate, charged to a secured loan is referred to as the Annual Percentage Rate (APR). APRs are either variable or fixed. A fixed APR does not change over the course of a loan term. A variable APR varies based on changes to the prime rate, and rises and falls over the course of a loan term. Both fixed and variable APRs are common in home mortgage loans and refinances. Most secured personal loans have fixed APRs, however.
Applying for a secured loan is done in person or online, depending on the lender and situation. Proof of income, residence, identity and collateral are required. Loan approval is possible on the same day an application is submitted, and sometimes even in minutes. Secured loans for mortgages and mortgage refinances take longer to be approved and processed than personal loans. Funding is facilitated by direct deposit or check, again depending on the lender and situation.
Funding for secured personal loans happens quickly after approval, usually in twenty-four to forty-eight hours, but occasionally on the same day. Funding for mortgage and mortgage refinances takes longer due to appraisals, home inspections and the overall underwriting processes and regulations required for home loans.