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What is a Secured Loan?
Secured loans are often a stepping stone, used to help you buy some of the most important things in your life. It is where a lender requires you to use a piece of property, an asset, or money as collateral in order to get funding. Some examples of a secured loan include:
▪️ Home equity loans
▪️ Car-title loans
▪️ Auto loans
Your collateral usually comes into play if you miss repayments and your account goes into default.
Worried about your Secured Loan?
If you are worried about how you are going to repay your Secured Loan, we’re here to help you! There are many people who will find themselves in a financial struggle, repaying a Secured Loan. Others might be concerned with taking up a Secured Loan. Here at Business Helpline, We can discuss all of your options and help you plan for a better future.
Call our team today on 0800 088 2142.
What are the benefits of a secured loan?
▪️Potentially lower interest rate: Since secured loans are tied to an asset or property, interest rates tend to be lower since there is less of a financial risk on the creditors side. Creditors feel confident they will get their money back, whether in the form of monthly repayments from you or the sale of the asset.
▪️Some tax deductions allowed: Some secured loans, like mortgages, will allow you to deduct from your taxes the interest you paid (up to a certain amount).
▪️Lower threshold to qualify: Since you’re putting up collateral, the barrier to qualify is lower. Instead of considering your credit score and history, it’s also taking into account what you’re using to secure the loan.
What are the risks of a secured loan?
▪️Has the potential to lose assets: If you don’t make on-time payments every month, you could face losing your collateral, whether that is your home or car.
▪️Not as flexible for borrowing: Some unsecured loans, like personal loans, allow you to spend the borrowed money on whatever you’d like. Specific secured loans are generally tied to the collateral you’re putting up. For instance, a mortgage is tied to your home. Your auto loan is tied to the vehicle you’re buying.
How do you claim redundancy?
You must make claims for director redundancy through the Redundancy Payments Service (RPS). You will be paid with money from the National Insurance Fund if you are eligible for redundancy.
What is insolvent liquidation?
Generally, there are two main types of insolvent liquidation procedures. The first is Compulsory Liquidation and the second is a Creditors’ Voluntary Liquidation (CVL).
A compulsory liquidation happens when a creditor, or more than one creditor, petitions to the court for your company to be forced into liquidation. This will be achieved by putting together a winding-up petition (WUP) against your business.
On the other hand, a CVL is when the liquidation process is voluntarily started by directors within that insolvent company. They usually enter this process because of intense pressure from creditors, leaving directors concerned with nowhere else to go. An insolvent company would hire an insolvency practitioner and they would take control of the whole process – talking to creditors and facilitating the process of selling assets to repay creditors.
A Creditors’ Voluntary Liquidation, is when the liquidation process is started voluntarily by the directors of an insolvent company. This process is usually entered into because increasing creditor pressures leave the director nowhere else to turn. The insolvent company would appoint an insolvency practitioner who would then call a meeting of the company’s creditors and facilitate the process of selling the company’s assets to repay creditors. Can I claim redundancy if my company isn’t in, or isn’t facing liquidation?
You cannot claim redundancy if your company is not facing liquidation.
Employees would not be able to claim redundancy while in employment so, with that in mind, a director can only claim redundancy when their company is in the process of going insolvent. Redundancy is designed to help those who have found themselves out of a job as opposed to helping those who simply want to quit their job.
Therefore, directors cannot seek redundancy in a solvent liquidation as this is seen as putting themselves out of work. There is a choice involved. Redundancy is to help those who lose their job without a say in the matter.
When can a claim be made for director redundancy?
Timescales are strict for redundancy both before and after liquidation. You have to start the process within 12 months of your company entering liquidation, or before your company is liquidated. The longer that you leave claiming, the more challenging it is to be successful in your pursuit. It is advisable to submit your claim within 6 months if your company has already been liquidated.
It is better to make a claim before your company is liquidated. People in this situation find that receiving a redundancy payment can help to make the decision to liquidate their company a great deal easier. If you wait until after your company is liquidated, you could miss out on claiming all of your statutory entitlements. So, in short, get it done beforehand!
Get in touch
If you are unsure whether refinancing this pathway will be right for you, don’t hesitate in contacting us.
Call one of our compassionate experts at 0800 088 2142.
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Secured Loan FAQs
A key risk of a secured loan is that it puts your assets on the line. Your home is, of course, an asset. This means that you could be forced to sell your home if you can’t keep up to date with repayments.
If you become concerned about this in the middle of your loan, talk to your lender as soon as you possibly can. Explain your circumstances and what you might be able to do to help to pay off your debt.
Your loan might have a varying interest rate. This means that your monthly repayments could increase on any given month.
Be sure to check the terms and conditions of your secured loan before committing to it.
The more equity you have in your house, the more you will be able to borrow. This is because you will be putting down a bigger statement of intent from your side. In essence, you have more to bargain with. A lender will probably give you less if you have a home without much equity in it.
If you are paying over a longer period of time, your payments will be lower. However, the longer the term of the loan, the more you will pay back in interest.
If you want to repay your secured loan at an earlier date, you might have to pay an early repayment charge. This could be something in the region of one or two months’ interest.
Speak to an insolvency expert for immediate help and advice and to arrange a free no-obligation consultation with your local office
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If you are looking to get advice for your company, taking advice at an early stage is crucial. Business Helpline is a licensed insolvency practitioner who is committed to providing free impartial help and advice.
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