Fast secured loans might not just add convenience to your homeowner loan or secured personal loan application – but they could save you money to boot. 

Join us as we recap on the details of secured loans before unravelling the key details of fast secured loans. 

What is a secured loan?

Secured loans are a branch of loans that use an asset as security within the credit agreement. The asset is therefore used as collateral in the event that the individual(s) cannot repay the loan as agreed, making it easier for the lender to recover any arrears and the debt. 

This reduces your perceived lending risk and should increase the amount you can borrow or unlock competitive rates. However, these will still depend on personal circumstances and your credit score.  

The opposite of this is an unsecured loan, which does not use any assets as collateral within the credit agreement. 

You should think carefully before securing an asset against a loan. Debts against your home could mean your home may be repossessed and sold to pay the debt. However, not all secured loans use a home as collateral. You can also find loans secured against cars and sometimes even fine art. 

Moreover, only ever consider secured loans which are offered by lenders that are authorised and regulated by the Financial Conduct Authority (FCA). 

How do secured loans work?

A debt secured with an asset will provide the borrower with a lump sum amount that has to be repaid over a fixed loan term of monthly repayments which include repayments on the principal personal loan amount and an interest payment. Monthly repayments continue as agreed over the fixed period until the loan is paid off.

However, if you cannot keep up repayments on the secured loan and have missed multiple monthly payments, the lender can choose to repossess the asset used as collateral and sell it to raise money. This sum of money will be used to pay off all of your debt, including interest and potential late fees. Any remaining money will be paid back to the debtor.

Things can get tricky if the asset used as collateral in a secured loan has other debts attached to it. The best example would be multiple debts secured against your home. You could have an ongoing mortgage and have a home equity loan which is secured against your home equity. In this case, either lender could seize the home and sell it if you fail to repay through monthly payments. But the mortgage provider gets priority over the money raised from the sale. 

The opposite of not being able to keep up repayments is to want to pay the loan off earlier than agreed. This may be possible but you may be subject to an early repayment charge. 

We should also note that not every secured loan provides a lump sum. Some provide a draw period and the loan is paid out in instalments with somewhat different repayment terms as a result. It all depends on the type of secured loan taken out. 

An example of a secured loan

As mentioned at the start of this guide, secured loans is an umbrella term for many different types of secured loans. 

One example of a secured loan is a secured debt consolidation loan. Debt consolidation is the process of consolidating existing borrowing by taking out large credit to pay off multiple other debts, such as personal loans and credit cards. 

The new credit should have more favourable repayment terms, such as lower interest. You have then merged all the money owed into one place so it is easier to manage and saves some money on payments. You may wish to search for fast secured loans when thinking of consolidating existing debts because the faster you consolidate the more you may be able to save by avoiding higher interest rates. 

Most secured debt consolidation loans use home equity or property as security. Using your property could mean you lose your home if you repeatedly default on your monthly repayment. 

Are homeowner loans a type of secured loan?

Homeowner loans can be another type of secured personal loan. A homeowner loan is a loan available to people who have amassed enough home equity and wish to use this home equity as collateral in the loan agreement. Most people want to borrow money with a homeowner loan for the purposes of debt consolidation or home improvements. 

As you will have guessed by now, securing debts against your home through a homeowner loan means your home may be repossessed if you do not repay as agreed. Make sure you understand the risks and think carefully before securing a homeowner loan. 

The pros and cons of a secured loan

The benefits:

  1. They can enable larger borrowing
  2. They can offer lower rates of interest
  3. You can find secured loans for bad credit
  4. Many types for different purposes, e.g., homeowner loans and debt consolidation loans

The disadvantages:

  1. Your asset and possibly your family home is at risk
  2. There may be additional fees and charges (appraisal, closing cost etc.,)
  3. Even fast secured loans may not be as quick as unsecured loans

Ways to get a secured loan

Loans secured by assets are available from banks and online loan providers. You can apply for these loans with the help of professional financial advisors and credit brokers, who will charge a broker fee. 

Can you get a secured loan without a broker?

You can get a secured loan independently without using any credit broker or commercial service. You will have to search the market yourself, which has been made easier to understand thanks to online loan calculators. These calculators enable you to enter the amount you want to borrow and your preferred repayment term. They’ll then provide you with a quote based on the representative APR – which may not be entirely accurate. 

How quickly can you get a secured loan?

The length of time it takes to get a decision on your secured loan is between two and six weeks on average. The reason there is such a difference between the shorter and longer estimate is that some lenders will need to complete a valuation/appraisal on your asset, especially if you’re borrowing against property or home equity. This process can take time and may come at a cost. 

Once the loan has been approved you can expect it to hit your account within a couple of working days. 

What is a fast secured loan?

Fast secured loans are secured loans that are advertised as quick to get a decision and fast to put the loan amount into your bank account. Timeframes can vary but are usually below the average times advertised elsewhere – and sometimes less than two weeks. A handful of lenders promise to put the money in your account the same day as you get approved. 

When most people decide that a secured loan is the best option for their credit needs, they usually want to get one approved swiftly. This may be out of convenience and anticipation, but it can also because getting one quicker could help save money.

How fast secured loans can save you money

Fast secured loans can help the individual save money, especially if they want to consolidate debts and are racing against the clock to save on the current high-interest rates they’re paying. 

Another way that a fast secured loan could save you money is if the money is earmarked for home improvements and there is currently a deal on a new kitchen etc. By getting the money quicker they may be able to take advantage of a limited-time offer which otherwise they would miss out on. 

Are fast secured loans a good idea?

If fast secured loans can save you money as opposed to other secured loan deals on the market, they could be considered a good idea. However, if the lender is advertising a secured loan on the basis of the speed of processing, it’s unlikely to have the best interest rates on the market. You should compare all your options meticulously. 

Getting a secured loan quicker – even if it allows you to take advantage of a limited-time deal on home improvements – may not be the cheapest over the long term. 

Do fast secured loans really exist?

It’s debatable whether fast secured loans really exist. Of course, some lenders will be able to assess your application and come up with a decision quicker than others. But some secured loan applications take time, including homeowner loans where your property may need to be re-valued as part of working out how much home equity you have. 

Lenders could simply be advertising fast secured loans as a way to hoover up some of the market wishing to get their loan quicker. If you read the small print on fast secured loans, you’ll likely find that the processing time can vary and may take just as long as other secured loans not promoted by the speed of application processing. 

Moreover, there could be some rogue lenders operating illegally offering fast secured loans, or even doorstep lenders promising the same. No matter how swiftly they promise to approve your application, you should only consider using a lender that is legal, meaning they are authorised and regulated by the Financial Conduct Authority. 

Are unsecured loans quicker to get?

Unsecured loans might be quicker to get approved and into your account. Because a secured loan may require the lender to complete an appraisal of your asset to work out its accurate market value, the process can be slower. On the contrary, an unsecured loan will not require any asset appraisals and can sometimes be approved within the same day with the money sent soon after. 

What credit score do I need to get a secured loan?

Each lender is allowed to assess your application in their own way. They will analyse your income and existing debts to see if you meet their affordability test, and they’ll check your credit history. To get the best deals you will be required to excel in the affordability test and have a good or excellent credit score. However, there is no fixed credit score benchmark you need to hit. It comes down to each lender’s judgement. 

Can I get a secured loan with a poor credit score?

You could still be approved for a secured loan with bad credit. The interest rate you’re offered when you have a bad credit history is likely to be higher because you’re seen as a greater lending risk. Some providers even offer bad credit secured loans and market specifically to those with an unsatisfactory credit report. 

Are secured loans easier to get?

Secured loans are generally considered easier to get in comparison to unsecured loans. A secured type of loan makes it easier and less costly to recover the debt when the individual has stopped repaying. 

This is why so many people with bad credit decide to consider secured loans over unsecured alternatives. But you may want to get debt advice from a UK charity before applying. 

Are fast secured loans even easier to get?

It could be argued that fast secured loans are even easier to get than any other type of secured loan – if they are genuinely a fast loan. 

These quick lenders are marketing their loans as fast rather than on any other USP, such as the interest rate offered. Thus, the interest rate on fast secured loans may be considerably higher than the market average and would therefore be somewhat easier to get approved for. However, this is debatable and will depend on specific circumstances. 

MoneyNerd has more on secured loans!

Before you run off to apply for a secured loan or a fast secured loan, make sure you learn more about these loans. MoneyNerd has a repertoire of new secured loan guides with hints and tips on what to look out for. Read them for free today! 

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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