These are also referred to as secured insurances. When obtaining an additional insurance, there are many pros and cons, which a person must consider before obtaining such a insurance. There are no risks to the lender because if the borrower does not repay the insurance, the lender has the collateral that the borrower used. Often with an additional insurance, you get a lower interest rate and a longer insurance repayment period. Before applying for a insurance, decide how much money you will need. You should avoid getting excessive side insurances because in the end you will pay off more money. To get an idea of how much you can borrow, you should calculate your monthly expenses and monthly income and then determine how much is left after knowing how much is left and how much of the monthly payment you can afford.
Next, you will decide what to offer as collateral because often what you offer as collateral will help determine the price of your insurance. A security insurance can be used for debt consolidation, home improvements, a vacation, or a major purchase. When you apply for this insurance, the insurances that the bank or lender gives you in return for guarantees are usually a percentage of the estimated market value. For example, if you use a twenty thousand dollar car, the lender will likely offer you an additional insurance of seventeen thousand dollars, or approximately eighty-five percent of the value of your collateral.
• It is an easy insurance to obtain and is usually approved quickly
• The borrower can usually borrow more money than he can borrow with an unsecured insurance, which is the type of insurance you will need to have a good credit score, a steady job, and a good income to get it.
• If you are rejected for an unsecured insurance many times, the person can get a secured insurance.
• There is no maximum amount that a borrower can borrow.
• What the borrower uses as collateral is at risk if he is not able to repay the insurance at the agreed time.
• Security insurance is not available to anyone only as you will need to own a car, house or other piece of property that can be used as collateral and if you do not have any of the three you cannot get this type of insurance.
As you can see, there are more pros than cons when considering an additional insurance but make sure that you are not borrowing more than you can repay.