Since the Global Financial Crisis (GFC) hit, getting finance has become difficult for many Australian consumers from all walks of life. Banks are getting strict and financial circumstances have left an important portion of the population unable to get a personal, short-term loan for everyday needs.

Circumstances change. No one is immune from a temporary shortfall in funds or a financial emergency they simply did not foresee. In these circumstances, a short-term loan can help a great deal. It is a quick and easy option available to most, and there are a number of financial providers that offer this service.

There are some basic requirements for giving a loan. Some lenders offer unsecured loans – a loan given to the borrower without taking an asset to insure against non-payment by the borrower. Understandably, the interest rates are a lot higher under these terms and conditions.

But often lenders offer a personal secured loan. Here, a lender is protected from default or non-payment by holding an asset that the borrower owns as security. This asset is known as collateral and it must be put forward as insurance for the loan. Naturally, the interest rates offered under a secured loan are generally much lower. It also gives an incentive for the borrower to pay the loan repayments.

To get a secured personal loan, there are some simple steps to follow:

Determine how much you need

First, you need to determine how much money you would like to borrow. This can be based on your current needs, or maybe, requirements for a later use that you anticipate.

List your assets

Secondly, you need to make a list of assets you can use as collateral. This is an important point to get a secured loan from a lender. A number of assets that you own can be put forward. The most common items for a short-term secured personal loan include:

• Cars / motorbikes / boats / caravan
• Jewellery
• House
• Business Equipment
• Other assets including shares (however, there may be a longer approval process for these).

Alternatively, many lenders can also arrange a “hire purchase” which allows the borrower to purchase the item without having the immediate funds to do so. This is a convenient option for small and medium business that uses expensive equipment on a daily basis.

All items put forward as collateral will need to be valued and these documents must be presented during the application process. Anyone owning any of these assets can apply for a secured loan. For example, a single income family needing additional cash for an unanticipated expense can get assistance through a secured loan by using their car as collateral. On the other hand, a small or medium sized business looking to purchase extra tables and chairs to expand their business can use a “hire purchase” program. Here the business can put forward an existing business equipment that they own as collateral.

Get your documents in order

Sign application forms and submit documents of the collateral you propose to use. During this process there will sometimes be an opportunity to negotiate the interest rate.

Receive the money

Finally, once the secured loan is approved, the funds will be available in the nominated account. It’s that simple.

Things to consider

As with all loans, there are some risks that the borrower needs to be aware of. These include a possible lowering of credit score and loss of your collateral if there is a missed loan repayment. However, setting aside money for loan repayments and setting up a direct debit so that you don’t forget your payments can prevent these situations from arising.

As a National Credit Provider with almost a decade in the business, SRG Finance focuses on short-term personal finance solutions, and we are also willing to offer larger secured loans for individuals and businesses.