Tuesday, December 15, 2020

Loan with property guarantee: Myths and Truths


There are many myths about lending with collateralized property, a modality in which a property is used as a guarantee that the installments of the agreement will be properly fulfilled.

In addition, many people are afraid to take out loans that request some asset – vehicle or property – as collateral, as there is a great fear of losing it if the agreement cannot be fulfilled. However, we will see that, what exists, there is a great lack of information behind this credit.

For this, we have gathered in this post 9 myths and truths in relation to the truths and myths about a loan with property guarantee so that you will realize that this subject is not a seven-headed bug. Check out!

The loan with collateral is very bureaucratic

The loan with collateral is very bureaucratic


The bureaucracy and processes required to contract a loan with the collateralized property are the same as for other types of financing, those that do not need collateral. What can convey this idea are the documents requested for the analysis of your data.

Some bureaucracies are necessary even for security reasons for the client and the financial institution.

However, these processes are being increasingly facilitated and done quickly and comfortably for the customer. After all, the intention is to help you out of a critical financial situation, and not make it difficult.

Interest rates are lower

Interest rates are lower


In addition to being true – and not one of the many myths about lending with collateral – this is also one of the main advantages.

Interest rates are considerably lower compared to personal loans, overdrafts and payroll loans, for example.

This happens precisely because of the property that will be assigned as collateral, because, thus, the financial institution is assured that you will comply with your obligations signed in the contract, which reduces the risks and, consequently, the interest and other fees.

3. The bank wants to keep the property



This should be the issue that most gives fear and withdrawal when it comes to a loan with the property as collateral. However, it is a myth.

The bank does not intend to keep your asset, as it works only as a type of insurance that the financial institution does, but does not intend to use.

Only in the latter case is the property sold. Before this practice, renegotiation proposals are made so that the client is able to pay the loan installments and does not lose his asset.

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