Secured loans are widely regarded as being suitable for anyone who is trying to raise a large amount of money in a short amount of time. Similarly, if someone is having difficulty getting an unsecured loan or have a poor credit history, an unsecured loan can allow them to access the money that they want.
If you have already been turned down for a secured loan then an unsecured loan is a more obtainable alternative as lenders are known to be more flexible when it comes to secured loans. They are often considered when people need to purchase something quite large, such as a new car, a luxury holiday, or a home improvement like an extension.
A secured loan is is secured on property. Because of this, most lenders will approve your loan even if you have a history of bad credit or even County Court Judgements (CCJ’s), defaults and arrears. These kind of unsecured loans are very attractive to those who would otherwise not qualify for an unsecured bank loan.
A common misconception regarding secured loans is that you have to own your own home in order to qualify, however if you have a mortgage, then you can put up the proportion of the home that you do own as security when applying for a secured loan.
You can usually borrow any amount between £5,000 and £75,000 and then repay it over a period of 5 to 25 years. Your current circumstances will decide which kind of repayment plan you choose. Secured loans will generally be cheaper than unsecured loans and various other forms of borrowing because there is significant security in the form of a home behind them.
The interest rate for a secured loan depends upon many different factors, such as the amount of money you borrow, the length of time your repayment will take, and personal details such as your income, etc. It is also possible to insure your payments, this is to ensure your peace of mind. If you lose your job or are unable to work because of accident or sickness, there will be no need to worry.
The main benefits of a secured loan include lower monthly payment than unsecured loans, the ability to borrow more money than you would be able to on an unsecured loan and the ability to spread your repayments over a longer period of time.
Secured loans can still be risky and it is recommended that you always seek professional financial advise before making a decision.