Secured Loans – A Comprehensive Comparison
Representative example: If you borrow £34,000 over 15 years at a rate of 8.26% variable, you will pay 180 instalments of £370.70 per month and a total amount payable of £66,726.00. This includes the net loan, interest of £28,531.00, a broker fee of £3,400 and a lender fee of £795. The overall cost for comparison is 10.8% APRC variable. Typical 10.8% APRC variable
Representative example: If you borrow £34,000 over 15 years at a rate of 8.26% variable, you will pay 180 instalments of £370.70 per month and a total amount payable of £66,726.00. This includes the net loan, interest of £28,531.00, a broker fee of £3,400 and a lender fee of £795. The overall cost for comparison is 10.8% APRC variable. Typical 10.8% APRC variable
Understanding secured loans may seem tricky, but you’re in the right place. This guide is here to guide you, just as it guides over 6,900 people each month.
Secured loans might be a good way for some people to borrow money. They can sometimes offer lower rates and easier repayments. But it’s important to know how they work and understand the risks.
In this guide, we’ll explain:
- What secured loans are.
- How they work.
- The cost of a bad secured loan.
- If you can pay back a secured loan early.
- How to compare different secured loans.
We know that taking out a loan can be a big step. It might feel scary, especially if you’re already in debt. But remember, you’re not alone. Many people are in the same boat, and we’re here to support you with clear, simple advice. Let’s learn more about secured loans together.
Where is the best place to get one?
There is no single best place to get a secured loan because lenders frequently change the type of secured loan deals on offer. To find the best deals, you must compare secured loans online.
Moreover, the secured loan deal will be determined by your personal circumstances, including income and credit score. Thus, one person may find the best secured loan for them with lender A, and another person may find the best deal for them at lender Z.
» TAKE ACTION NOW: Compare deals from the UK’s leading lenders
Which banks offer them?
Most, if not all, UK banks offer some type of secured loan, such as NatWest, Santander, Lloyds and many others. You can usually apply for a secured loan from a bank online.
However, some banks may not advertise secured loans, and you may need to discuss your options in a branch. You might need to make an appointment in advance.
Lender |
APRC |
Monthly payment |
Total amount repayable |
|---|---|---|---|
| United Trust Bank Ltd | 5.99% |
£218.73 |
£26,247.92 |
| Equifinance | 6.59% |
£219.77 |
£26,372.92 |
| Pepper Money | 6.86% |
£220.24 |
£26,429.17 |
| Together | 7.65% |
£221.61 |
£26,593.75 |
| Selina | 7.79% |
£221.86 |
£26,622.92 |
| Spring | 10.05% |
£225.78 |
£27,093.75 |
| Loan Logics | 11.2% |
£227.78 |
£27,333.33 |
| Evolution | 11.28% |
£227.92 |
£27,350.00 |
Representative example: If you borrow £34,000 over 15 years at a rate of 8.26% variable, you will pay 180 instalments of £370.70 per month and a total amount payable of £66,726.00. This includes the net loan, interest of £28,531.00, a broker fee of £3,400 and a lender fee of £795. The overall cost for comparison is 10.8% APRC variable. Typical 10.8% APRC variable.
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Where else can I get a loan?
Along with UK banks, secured loans are also available from online loan lenders. Be careful if you take out a secured loan from an online lender, as they may be acting as a broker, not a lender.
Some online loan websites give the impression that they are offering loans secured directly when, in fact, they are a credit broker. These sites scan partnered loan providers to compare options and find you a loan. This may sound tempting and an easy way to compare secured loans “hands-free”, but you may not get the best deal and might have to pay a fee or commission to the broker.
If you decide to use a direct lender or broker, remember that it is crucial they are governed by the Financial Conduct Authority.
How do I compare my options?
Getting a secured loan starts by comparing your options. Unfortunately, this isn’t as straightforward as you might think – but it’s by no means impossible.
Each lender advertises their loan with a representative example rate. This is the rate that the average applicant is likely to receive (51% of people), but around 49% of people will be offered a different rate, often higher. Using the representative rate is the best and fairest way of advertising a loan when interest rates depend on individual circumstances.
Using an online calculator
Potential applicants can use the lender’s online loan calculator to enter how much they want to borrow and how long they want to repay. The calculator crunches the numbers to produce projected monthly payments. But these projections are based on the representative rate only.
You can consider them fairly accurate if you have a decent credit score, but if you have an exceptionally excellent score or bad credit, they may not be very accurate. Alternatively, you may be able to get a quote from some lenders for more accurate projections. These quotes usually involve a soft credit search only.
Secured loans for all purposes
- Stuck paying high interest on credit card debts & loans?
- Looking to fund a home improvement project?
- Dreaming of finally taking the once-in-a-lifetime trip?
Polly
“This was by far possibly one of the nicest experiences I’ve had getting a secured loan.”
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Should I use a comparison website?
Loan comparison websites are third-party websites that can quickly and easily give you an overview of secured loans on the UK market at the time of your search. They can be extremely useful in identifying different options and can save you lots of time.
It may be worth using these loan comparison websites, even if it is just to do a preliminary search before you do independent research.
Who can help me?
To get help to compare loans, consider using a financial adviser or loan broker. These People and companies can search and compare all types of secured and homeowner loans on your behalf, equipped with expert knowledge.
However, they do come at a cost, and they may or may not save you money overall.
How much does it cost?
If you pay off a secured loan as agreed, you will only need to pay back the interest rate and possibly closing costs on some secured loans. Interest can range from 2-25+%, and closing costs are usually between 2-5% of the loan amount.
The rates you are offered will also depend on the loan amount required, the loan term, and current market conditions. To be able to get the cheapest secured loans, you’ll need to have very good finances and credit credit score.
The interest rate you are offered depends on your personal circumstances, and someone with a better credit score than you could get a lower rate using unsecured loans than you get using a secured loan.
What are some examples?
To give you an idea of the variety of secured loans available, here are some examples:
- Generic secured loans
- Second-charge mortgages, also known as homeowner loans
- Debt consolidation loans (also available as unsecured credit)
- Home improvement loans (also available as unsecured credit)
- Guarantor loans
Remember to only consider the above when advertised by an organisation that is authorised and regulated by the Financial Conduct Authority.
Can you get a fixed-rate loan?
Secured loans may be offered with either a fixed interest rate or variable interest rate.
Fixed interest rates remain the same throughout the full loan term or throughout an initial period of the loan repayment term before transitioning into a variable rate. The benefit of a fixed interest rate is you know the exact cost of the loan and can easily budget for repayments.
Variable interest rates are when the amount of interest payable each month can change based on how the economy is performing and the Bank of England base rate. Loan repayments with a variable rate can be harder to budget for because the amount owed changes.
Some loans with a secured asset are more likely to use a variable rate, such as home equity loans or home equity lines of credit (HELOC). The reason for this is that these loans are often for larger credit and, therefore, usually have longer repayment periods.
The lender will protect itself by offering a variable rate that can change over a fixed rate. If a fixed rate is offered, it’s usually for a limited period before switching to the lender’s standard variable rate.
What credit score do I need?
There is no minimum credit score you must have to get a secured loan. Applications for secured loans are judged on the entirety of the application, including income and existing debts, to conduct an affordability check and a credit score assessment.
Each lender can apply its own test to either approve or deny the loan and therefore, there is no absolute credit score you must have that applies to all lenders.
