What is secured lending?

Secured lending is a form of finance where you use an asset, such as property or a car, as security for the loan. If the loan is not repaid, you could lose the asset to the lender.

Secured lending is usually associated with mortgages or car finance. For both, the loan is either secured on the property or on the car.

Due to the asset being used as security, a lender has greater guarantee of recouping the funds if a customer does not meet the repayments.

• If you have a poor credit rating, a bad credit secured loan may be an option
• An asset, such as property will act as security against the loan. Failure to repay the loan may result in losing the asset
• Secured lending may allow you to borrow larger amounts
• Secured loans are also known as mortgages or homeowner

The difference between secured and unsecured lending is that you do not need to offer any asset as security with an unsecured personal loan.

As there is no asset offered as security, the interest rates could be higher for unsecured loans.

Failing to repay a secured loan could result in additional charges and will impact your credit rating. This may also result in repossession of your home or in some instances Bankruptcy.