At some point or another, everyone needs financial support in their lives for a variety of purposes. Say, for their career or growth, or when they need to own luxury items like cars, etc. During such times, our own savings may not be enough to cover the whole cost, and hence, we need external financial support—loans. This is where secured loans come into the play. Secured loans are known for providing stability to both lenders and borrowers. It secures borrowed funds to monetary assets. Now, what happens to these monetary assets? Well, if, as it sometimes happens, the borrower gets stuck in the financial hardships and finds themselves unable to pay their debts back, the lender can sell or seize their secured assets.
This is where the secured loan settlement comes to the rescue of the borrower. In this blog, we will be discussing the blog in good detail; so that you can have a better and clearer understanding of the topic.
Definition of a Secured Loan | What It Is
As we have discussed in the intro of this blog, a secured loan is when someone borrows money from a lender and pledges something, which is usually a valuable asset, as a guarantee of paying that debt back to the lender, this is called a secured loan. Note that this “valuable asset” can be anything—a vehicle, land, and even a costly equipment; anything that holds a significant value to the borrower. Now, in case, if the borrower fails to repay their debt, the lender can seize or sell the asset the borrower had pledged on while taking the loan.
Loan Category or Type | Which Loan Covers Secured Loan
Here is a type of loan that covers secured loans.
- Car Loan
- House Loan
- Mortgage Loan
- Business Secured Loan
- Secured Personal Loan, etc.
What is Secured Loan Settlement?
A secured loan settlement is when the borrower wants to negotiate with the lender, for paying a lower amount than what was borrowed. There can be several reasons why a borrower might want to settle their loan with the help of secured loan settlement services from a reliable financial consultant and expert. The reasons may include: illness, unemployment, injury, etc. And when, after negotiating and paying the reduced and settled amount, the debt is now considered as “settled.”
Procedures of a Secured Loan Settlement | Know the Steps Included
In the below section, we have discussed the whole process included in a secured loan settlement.
1. Information Gathering
When the borrower wants to pursue negotiations with their lender for a secured loan settlement process, it will require them to gather information. At this very initial stage, it is important for the borrower to have all the necessary information handy. Records of loan agreement and payment history helps. It will show a clear, documented record of your repayment. However, it is important to note that at this initial stage of the negotiation, this information is not sufficient. The borrower also needs to mention their present source of income and what their expenses are. This additional information is necessary because it can provide the borrower with a chance of settling the due amount in proportion to the borrower’s ability to repay it.
2. Approach a Legal and Financial Consultant for Help
The borrower needs to come up with a plan to get through the Secured Loan Settlement process before it starts. They ought to look for a financial advisor or legal assistance for this. A lawyer will assist you in offering a practical strategy that takes into account the borrower’s financial circumstances while approaching the bank or lender. A lawyer’s assistance is necessary since they help steer the entire process in a way that is compliant with the law.
3. Have a Discourse with Creditor
A lawyer or attorney you engage will communicate openly with the lender or creditor on the borrower’s behalf. In order to reach a settlement for a secured loan, the borrower must explicitly state their financial situation and the reasons for their failure to make repayments. A favorable settlement agreement is more likely to be reached when there is open and honest communication.
4. Written Agreement and Negotiation
The next stage is for the borrower’s attorney to persuade the lender to engage in negotiations. Finding a solution through negotiation is similar to chatting. The borrower states how much they can afford to pay at this point. A written agreement should exist if this negotiation is successful in persuading the debtor and lender. The fair deal that was discussed during the negotiation will be explicitly mentioned in this agreement. This document guarantees that there are no misunderstandings between the parties and acts as proof.
5. Completed Settlement of Secured Loans
The final step after conversation and agreement is to finalize the settlement. When the parties reach a settlement agreement, the lender specifies a period of time during which the borrower must make the agreed-upon payment. The borrower must have a written certification or receipt that explicitly states the debt has been “settled” after making the payment.
Get Professional and Reliable Assistance in Your Secured Loan Settlement
If you are struggling to repay your debts and are worried about your secured assets, we at Guardian Financial Experts are here to help you get a secured loan settlement. We are a team of skilled and experienced staff with their proven expertise in the industry. Reach us out and let us help you lift the financial burden off your shoulders. Contact us now!