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Big and lavish purchases mean requirement of a large sum of money. Purchasing a car, renovating your home, arranging for an exotic holiday or meeting expenses for higher education...all require a big amount of cash. These needs may be in your priority list. However, you may be forced to postpone them owing to shortage of finances.

You have a great financing solution in the form of secured loans to fulfil your needs that require lump sum cash, such as the big purchases stated above. Secured loans are offered against collateral put forth by a borrower. The collateral may be any valuable asset, such as your home. When you take a secured loan against the equity in your home, the loan is known as home loans. A home loan is also considered a second mortgage.

Securing a loan against the home reduces the risk on the part of the lender. He knows that he can recover the loan amount in case of a payment default, by seizing and selling the home. This proves to be beneficial for the borrowers too. The borrower is in a position to bargain for a competitive interest rate, loan amount and terms and conditions. Though secured loans already carry a much lower interest rate, allow borrowing larger loan amounts and have easy terms, shopping around and bargaining will enable you to select the best deal.

A caution notice for those planning to apply for a secured loan! The market for secured loans is unregulated. In addition, the market is highly competitive. So, many lending organizations resort to advertisement gimmicks in their marketing campaigns, propagating that their loan deals offer very low APRs. However, the reality may be strikingly different. Lenders adopt risk-based pricing for their loan products. This means that higher the risk associated with a borrower, higher will be the price of a loan. For example, people with bad credit may get the shock of their lives when they realize that the interest they are required to pay is much higher than that advertised in the campaigns. So, do not base your financial planning on the advertised interest rates.