The Benefits of a Recourse Loan

In a recourse loan, a lender can sue for assets of a borrower that over and beyond the collateral pledged for the loan. In a loan default, this loan protects lenders from losses. These loans are only permitted in a few states. Many other states do not allow them in an effort to protect consumers.

Credit standards are flexible

One of the biggest benefits of this loan option is that the risk to the lender is so significantly reduced, that they are willing to offer more loans to borrowers. Credit standards are flexible and loan amounts are kept within 80 to 90 percent of the collateral.

Lower Interest Rate

A recourse loan is beneficial to a borrower because the rates are associated with the product tend to be lower than non-recourse loans. A lower interest rate means that a borrower has a lower repayment cost and may be able to afford payments.