Lenders often are entitled to take possession of the borrower’s assets to satisfy the debt. A lien is automatically entered in the Secretary of state and is removed from it once the loan amount is paid.
A creditor lends loans based on the above criterion which means that they are to be sure of what they have to do in case of failure of payments. This gives them the confidence that even though the borrower does not pay on time, they have some of their valuable assets to claim from.
Role of good credit score:
In order to avoid all these headaches and to have a smooth lend and borrow relationship, it is better to have a good credit score. It is evident that lenders give lot of weightage to your credit score while issuing loans. How good you are at paying on time payments, whether or not you have a history of default and other points are taken in to consideration. If your profile is approved then you will be issued loan. With your score, you can even get loan at desired interest rate. Though this plays a major role there are other factors like credit obligation information and tax books from which your loan repayment ability can be analysed.