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.
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.
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.