Ever wondered why lenders prefer advancing secured loans to their borrowers? If you actually happen to own your home then clearly you are unlikely to up sticks and leave with your creditor trying to work out where you, and more importantly to them: their money, have gone to. Go in for a secured loan if you are keen to save on interest amounts in the long run. Not only does it mean to the creditor that you are easy to contact, it also shows that you are far more likely to be a responsible borrower of money. Bearing in mind that most homeowners either have or did have a mortgage at some stage, they will likely have had to make monthly (or otherwise) repayments in the past, so it gives the creditor a sense of comfort that, based on past results, you're more likely to be a trustworthy borrower.
But if you are not a homeowner, things might be a little different for you. Let me explain. Given that you're living somewhere relatively permanent, but don't actually own the property yourself, you may find that you lack much to secure your loan on. What's the problem with this? Let us assume that you do not own any kind of real estate. To the lender, this would mean that you are worth a lot less personally. This means that, should you end up - despite your best efforts and intentions - getting further and further in to debt so that you're unable to pay back the loan, you have little to act as a buffer (like your property) with which the creditor can start looking at. Assuming that you don't own property, be prepared to have your lender label you as high risk. So how do they make up for that?
Most creditors deal with this by raising the amount of interest that they charge. Your loan may become more expensive, but at least the creditor is covering his risk. So, inversely, if you actually happen to be in the position of owning a home, you are a far more stable and likely candidate for the creditor's best loan deals.
But let us say that your spouse owns the house. In that case, it can sway the balance just enough if your credit record isn't without its patchy areas. If that's the case, you have two simple options to taking out a loan to make the most of that fact. Ensure that the creditor is aware of whom you happen to live with (and that they own the home, not you); or simply ask them to take out the loan for you. Feel around to see if securing the loan in your partner's name would not be a better idea. If your partner's name can get you a good bargain, go for it.
In the long run, it's all down to who's willing to sign on the line and what they have available to back up their loan with (combined with their credit history). Bear that in mind when trying to find quotes for relatively small loans in future. Basically, you have got to look out for ways in which you can negotiate a better deal. Keep an eye out for possibilities.
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