How many times have you heard of secured loan ? What does guaranteed financing mean? In everyday life it may be necessary to apply for a loan covered by an insurance policy that allows you to finance a sudden expense.
An additional form of guarantee agreed upon subscription of the loan is to “protect” the credit by entering into a Credit Protection Insurance (CPI).
In this guide by Billy Bunter we find out how the “secured” loan works.
Protected loan: let’s be clear!
What is a secured loan ? This is a loan that consists in the provision of a sum of money by a credit institution to a private individual or an entrepreneur.
The amount of financial capital disbursed can be variable: one speaks of protected micro-loans up to larger loans.
Obviously the amount of the disbursed capital depends on the needs of the applicant, but also on his financial position, on the guarantees he can provide and on the financial solvency.
Why protect a loan?
An unforeseen event, the loss of employment or a fortuitous event could make it difficult for the debtor to honor the loan installments.
Therefore, it is good advice to run for cover and take out a loan protected by an insurance policy , which protects the debt-crediting bank.
Thanks to a secured loan, both the debtor and the creditor bank are protected against possible credit default risks.
Protected loan: the insurance policy
The insurance policy to cover the credit can be provided to cover the total amount of the disbursed capital.
In the event of the debtor’s insolvency, therefore, the insurance company may reimburse the bank for the amount of one or more installments.
Although it is not compulsory to stipulate a CPI (Credit Protection Insurance), it is good advice to protect and protect your family, especially if when the amount of the loan is quite high (amounts over € 5000).
Since personal loans are among consumer credit products, banks must submit to the client at least two different quotes from insurance companies.
Do you need more information? Contact a Billy Bunter Consultant and request a personalized Estimate. Check out our range of loans secured by an insurance policy.
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