Secured Personal Loan – All You Need to Know & best Options
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 a way to get more money? A secured personal loan might be a good choice. It lets you borrow a bigger amount by using something valuable you own, such as your house, as a safety net. But, like anything else, it’s important to understand it well before making a decision.
We know you might have worries about what could happen if things go wrong. That’s why each month, over 6,900 people visit our site seeking advice on secured loans.
In this easy guide, we’ll cover:
- What a secured personal loan is.
- How a secured loan works.
- The difference between a secured and unsecured loan.
- How much you can borrow with a secured loan.
- What you can use a secured loan for.
Remember, you’re not alone. Many people need help understanding loans, and we’re here to support you.
Let’s get started!
Where can I get a secured personal loan?
Secured loans are widely available from banks, building societies, online loan companies and online banks. You will need to search and compare your options to find the deal that is right for your needs. As previously mentioned, only consider a lender that is authorised and regulated by the Financial Conduct Authority. Other lenders are operating illegally in the UK and could be a scam.
Be aware that some companies are a broker not a lender. They may appear as though they are a direct lender providing you with the loan, but they are in fact a middle-man company taking a cut or commission on monthly repayments.
Is it easier to get a secured loan than a personal loan?
It is considered a little bit easier to get a secured loan over an unsecured personal loan. By having a loan secured with an asset, it makes the process of recovering an unpaid debt by the lender quicker, easier and less costly. Therefore, you are considered less of a lending risk by the lender when choosing secured loans instead. And that means it is a little easier to be approved for these loans.
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However, when you apply for a secured loan, your income and debts will be analysed as part of affordability checks.
Your credit history will also be assessed to see how you managed finances in the past. If you fail any of these checks then you will be denied the loan, even if it is secured.
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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What credit score do I need for a secured personal loan?
There isn’t a fixed credit score you must have to be approved for a secured loan. Each lender applies its own independent affordability tests and assesses your credit score in its own way. One lender may deem your score too low for a secured loan, whereas another one will approve someone else with the same score.
That being said, you should aim to have at least a fair or good credit score to get the better interest rates. You can check your score before applying by using a credit reference agency, many of which offer free trials but do remember to cancel or you’ll be enrolled into a subscription service. If you see any errors make sure you flag them with the relevant lender. Mistakes happen all the time and your credit score could be negatively affected.
Can you get a secured personal loan with bad credit?
Those with a bad credit rating may still be able to get a secured personal loan. The loan you are offered is likely to have a higher interest rate because you are seen as a greater lending risk. The fact you’re using an asset as collateral makes it more likely you will be approved with bad credit in comparison to an unsecured loan.
There are even some lenders who offer secured loans to people with bad credit and advertise them as such. You might be more likely to be accepted when applying for a bad credit secured personal loan.
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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What is a secured personal loan calculator?
A secured personal loan calculator is an online financial calculator designed to help you compare secured loans. The calculator will allow you to enter the amount you want to borrow over a fixed period and show you what your monthly payments will be including interest.
These calculators use the lender’s representative APR, which is the rate that just over half of successful applicants received. Thus, they are not accurate for nearly half of people considering the loan, especially if you have poor credit history.
If you need help to compare loans, you might find comparison websites useful, or you may prefer to use commercial services.
Are secured loans a good idea?
A secured personal loan can be an advantageous way of getting credit if you want to use an asset as collateral to possibly access a larger loan amount or to get a lower interest rate. However, you should also fully understand the risks involved.
Some consider it a bad idea due to the added risk, especially when loans are secured against a family home and you could lose your home.
What is the interest rate on loans secured with an asset?
Loans secured with an asset usually offer a better interest rate compared to an unsecured loan. However, this may not always be the case. You might get a competitive rate with an unsecured loan if you have an excellent or really good credit score.
The interest may be a fixed rate or variable rate dependent on the Bank of England base rate among other things. On average, the best rates are usually between 2% and 10%. Getting a secured loan is preferable for this reason, but you should also watch out for other fees and loan charges which can make these loans more expensive than at first glance.
What can a secured loan be used for?
A secured personal loan is a type of generic secured loan that can be used for any purpose. Many people use personal secured loans for the same handful for reasons, namely:
- Debt consolidation – merging multiple debts together into one new debt with a lower interest rate.
- Home improvements – using the money to redecorate or renovate part of a home.
- Paying for cars and holidays – as stated.
- Private medical and education costs – the money is used to fund cosmetic surgeries or private healthcare, or even private schooling and university fees.
Some secured loans can only be used for specific purposes. For example, a second charge mortgage which may also be known as homeowner loans or home equity loans, is secured against home equity and can be used for the same reasons listed above.
On the other hand, you can get secured debt consolidation loans and secured home improvement loans, which can only be used for the reasons their name suggests.
