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Are Secured Loans Bad FAQ

Are Secured Loans Bad?

Secured Loans > Our Loans > Homeowner Loans > Are secured loans bad

Are secured loans bad?

Secured loans are neither “bad” nor “good”. Having a secured loan could help you access large amounts.

It’s up to your to ensure you make your payments on time. As long as that happens, nothing “bad” will come of having a secured loan.

Taking out a secured loan can bring many benefits – like paying for your ideal wedding.

On the other hand, it’s true that “bad” repayment behaviour could harm your credit score. However, lenders should ensure your loan payments are affordable. So all you need to do is keep up to date with your agreed payment schedule.

  • Using an asset as security can mean a higher chance of approval compared to unsecured loans.
  • This can also mean lower interest rates.
  • Demonstrating good repayment habits may help you improve a bad credit score.
  • Only negative behaviour – like repeated missed payments – will lead to a long-term adverse effect on your credit file.
  • While your asset could be technically repossessed, this is only ever a last resort.

If you are unable to make payments on your loan, your asset may be at risk and your credit score could be impacted.

Lenders can list a default against you if you miss too many payments. But they must adhere to strict rules as to when they can list a default against you – the same goes for repossession. Lenders will take these routes if necessary – but the best situation for both parties is the loan payments being made on time and in full.

Warning: Late payment can cause you serious money problems. For help, go to moneyhelper.org.uk

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