Secured loans may be easier to get than unsecured loans for large amounts. When an asset acts as security on a loan, the risk to lenders is reduced – so your chances of approval may be higher.
Securing a loan against a house or car means lower risk for the lender compared with unsecured loans. This means lenders may rely less on factors like your credit score when considering your application.
So if you own a valuable asset like a house (or are repaying the mortgage on one), but your credit score is low, a ‘bad credit’ secured loan may be a suitable option.
By offering security and lowering the risk to lenders, the chances of being approved for a secured loan could be higher – compared with an unsecured loan. It means your credit score is often not a decisive factor in assessing your application. That could make a secured loan a suitable option if you have bad credit.
A lender will also consider other factors when assessing your application. This will include your income and expenditure. The lender may need evidence of both to ensure the loan is affordable to you – now and throughout the term of the loan.
Representative 22.93% APRC variable.
For a typical loan of £26,600 over 180 months with a variable interest rate of 19.56% per annum, your monthly repayments would be £484.00. This includes a Product Fee of £2,660.00 (10% of the loan amount) and a Lending Fee* of £763.00, bringing the total repayable amount to £87,030.00. Annual Interest Rates range between 11.7% to 46.5% (variable). Maximum 50.00% APRC. *Lending Fee varies by country: England & Wales £763, Scotland £1,051, Northern Ireland: £1,736.
Think carefully before securing debts against your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.