Advertisement

Definition and information for secured loan

A secured loan is one of the cheapest forms of loan you can take out without remortgaging your home and allows a customer to borrow money which is secured against an asset they own. In most cases this asset is equity in their home but some lenders may consider lending the money against a painting, car or piece of artwork.

A secured loan provides a customer with a loan which is low risk to the lender, which means they will charge a lower interest rate than they would have done on an equivalent unsecured loan.

The other advantage of a secured loan is the potential size of the loan, with some lenders offering up to £100,000 to customers, way more than the usual £15,000 maximum of many unsecured loan lenders. Customers may also be able to pay back a secured loan over a far longer period of time, with some lenders offering ten, twenty or even twenty five year repayment terms.

Customers who take out a secured loan should be aware that the money they are borrowing is secured against the asset they own, and if for any reason they are unable to keep up repayments on the money they have borrowed, the lender is quite within their rights to repossess the asset and sell it to get the money back they are owed.

Customers can take out a secured loan for any legal reason, although they are commonly used to help pay for extensions and building work required on a house, paying for a wedding, or paying for a luxury holiday or a new car purchase.

A secured loan is a great way of borrowing money which can be paid back over a number of years without incurring huge interest rates and with current interest rates very low now is as good a time as any to take out a secured loan