Secured Loans advice, Tips, Ticks & FAQs
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
Looking for secured loans advice? Been considering a secured loan? You’ve come to the right place. Every month, more than 6,900 people visit this site seeking advice on similar matters.
In this guide, we’ll address the following questions:
- Are secured loans a good idea?
- Where should you look for a secured loan?
- How can you compare secured loans?
- Where can you get secured loans advice?
- Can secured debt be written off?
- Is it bad to get a secured loan?
- What are the interest rates on secured loans?
Understanding secured loans can be a bit tricky. But don’t worry; you’re not alone. We’re here to offer clear, simple advice.
Ready to learn more about secured loans? Let’s dive in!
Are secured loans a good idea?
Secured loans can be a good idea if you want to borrow a larger amount of money at a lower interest rate (not guaranteed!). They have some advantages over using an unsecured loan. But they also come with additional risks. They may even have more loan fees and charges.
Consider getting personalised secured loans advice if you want help working out what is best for you.
Additional fees
It’s important that you consider any additional fees which might apply as part of a secured loan, such as application fees, appraisal fees, early repayment fees, and late payment fees.
Where should I look for a secured loan?
Loans secured with assets are available widely across the UK. You can find them advertised with banks and any online loan company. If you want a loan secured with a property or home equity, you can even find them through specialist mortgage providers.
Lender |
APRC |
Monthly payment |
Total amount repayable |
|---|---|---|---|
| United Trust Bank Ltd | 5.99% |
£218.73 |
£26,247.92 |
| Pepper Money | 6.86% |
£220.24 |
£26,429.17 |
| Together | 6.95% |
£220.40 |
£26,447.92 |
| Selina | 7.5% |
£221.35 |
£26,562.50 |
| Equifinance | 7.7% |
£221.70 |
£26,604.17 |
| Spring | 10.5% |
£226.56 |
£27,187.50 |
| 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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How can I compare secured loans?
You can compare secured loans using the online calculators on each lender’s website. You’ll be able to enter the loan amount you want to borrow and how long you want to pay it back. The calculator will then predict an interest rate and your monthly repayments.
Lenders advertise loans with a representative APR example. This is what 51% of applications received, and there is a good chance you’ll be offered something different. The exact interest rate that you’re offered will depend on your personal circumstances and your credit history. Thus, these calculators are not always accurate.
Where can I get secured loans advice?
You can get free advice to help you understand secured loans right here at MoneyNerd. But if you want bespoke advice tailored to your situation, you may want to speak with free money advisor groups or get commercial support.
Brokers can help you find the best deals for your situation and even help you deal with application admin – but they come at a cost!
A credit broker is someone who works as a middleman to find suitable options that match your needs, and they may help you find a deal that you might have missed. But you have to pay for their services, and you may also be subject to ongoing fees and commissions.
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.”
Reviews shown are for Loans Warehouse. Search powered by Loans Warehouse.
Secured loans advice for getting out of debt
There are many groups and debt charities readily available in the UK to help people in any kind of debt, including secured loan debts. Some of the best options are:
- Step Change
- National Debtline
- Christians Against Poverty
- Local community groups
These types of groups provide free support and can even help set up debt solutions, such as a Debt Management Plan or Debt Relief Order. All your personal information is kept confidential, and they’re easily accessible over the phone. Some even have online chat support via their website if you prefer not to call.
Can secured debt be written off?
You could ask your secured loan provider to write off your debt, but it is extremely unlikely that they will agree to do so. After all, it is much easier for them to recover the money by taking your listed asset and selling it.
However, there may be some debt solutions that can help you overcome your secured loan arrears. Your circumstances will dictate which solution may work for you. You can get debt help to discuss these different options for free in the UK.
Is it bad to get a secured loan?
Some people think secured loans are bad because if you cannot pay the money back, the consequences can be disastrous. However, not paying back any loan can result in similar circumstances. Taking out a secured loan should be done with caution, but it could be a smart idea if you need larger credit or can access a competitive interest rate.
You can mitigate the risk of a secured loan by borrowing less. This might mean taking more time to save before taking out the loan, so you don’t need to borrow as much, and repayments are even more affordable.
Alternative options to secured loans
It’s always worth looking at other financing options, such as credit unions, guarantor loans, or Peer-to-Peer lending, to see if they might be more suitable for you. In my experience, though, all of these options come with risks, so it’s important you research thoroughly.
What happens if I don’t pay my secured loan?
If you do not pay one of your secured loan repayments, the lender will send you a letter or notification asking you to repay immediately. It is at this point that you should engage with the lender and explain what is going on and stopping you from paying. They may find a workable solution for you.
If you ignore their requests for payment, they could begin a process of repossessing your asset listed as collateral in the loan agreement. Note they can only seize and sell this asset and cannot repossess any other assets not listed in the agreement.
The asset is then sold, and the money is first used to pay off your arrears and late fees. Any remaining money from the asset sale will be yours to keep.
What are the interest rates on secured loans?
The interest rates on secured loans can differ between lenders. Some lenders offer lower interest compared to others. The best interest rates are between 2%-10% at the time of writing and are subject to change. You should always do your own research to find the best deals.
Secured loans may have fixed or variable interest rates. Fixed rates are more common with most of these loans, and this means the interest rate doesn’t change throughout the loan. This means that you know exactly what your monthly repayment will be and can budget for it more easily.
Variable-rate secured loans mean the interest rate can change over time, either up or down. Some secured loans are more likely to have a variable interest rate, such as second-charge mortgages.
Can I borrow a higher amount with a secured loan than with an unsecured loan?
Most unsecured loans are capped at around £25,000. You might find an unsecured loan provider willing to borrow you more. On the other hand, you are likely to get bigger loans if they are secured because you are seen as less of a lending risk. But it does depend on your personal finances and credit score as well.
Some secured loans can provide significantly larger credit, such as a second charge mortgage that uses your home equity as collateral.
Lenders will also consider other factors, such as your employment status and income stability, as well as the loan-to-value ratio (LTV) of the asset.
What is Loan to Value (LTV)?
LTV is a measurement within a risk assessment completed by lenders before agreeing to award mortgages. The calculation is used to determine the element of risk when lending a certain amount to you. A lower LTV ratio generally means you can get a lower interest rate because it poses less risk to the lender.
Will a secured loan impact my credit score?
Repaying a secured loan on time can have a positive effect on your credit score and make securing further credit somewhat easier in the future.
However, remember that any defaults will further damage your credit score. Multiple applications in a short space of time can also negatively impact it.
