It appears that consumer lending in 2005 will be slightly less than 2004. Borrowing is still high, but it appears as if consumers are making an effort to keep borrowing more under control. Mortgage loans are constitute the bulk of lending. Home equity loans are also very common. The difference between a mortgage and a home equity loan is that a mortgage is borrowed to buy a house, and it is also secured over the house. A home equity loan is when you already own a house, so you borrow for another purpose but still secure the loan over your house.

Secured loans are so popular for a number of reasons. While there are risks high risks to secured loans there are also great benefits.

Benefits of a secured loan.

· It is easier to be approved for the loan.
· The amount borrowed can be much higher.
· The interest rate will be a lot lower.
· The terms will be less onerous as for unsecured borrowing.

However the major risk is that if you fail to keep up with repayments, the security, which will usually be your home, is at risk. The lender can sell your home to get the value of their loan back. Such a risk needs to be considered very seriously. Losing ones home is the ultimate financial penalty. While there are safeguards, and your home will not be repossessed without a court order, the end of the line is repossession. Likewise, auto finance is typically secured over the vehicle you are seeking to buy. If you fail to make your car payments, the vehicle, which may be the only form of transportation you have, will be repossessed. There are also a number of long term consequences to defaulting on a loan.

While borrowing on a secured basis will give you access to more credit at better rates, all borrowing does ultimately depend on your credit report. The better your past behavior and credit rating, the more willing banks and other lenders will be to taking you on as a creditor. If you have a poor credit rating, you should consider borrowing a small amount and paying it off properly to improve your rating. This will put you in a better position when it comes to the really big purchases of life such as a new house.
About the Author

Joseph Kenny is the webmaster of the loan information sites http://www.selectloans.co.uk/ and also http://www.ukpersonalloanstore.co.uk. At the Personal Loan Store you can find some of the latest secured home loans explained in detail.

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