Secured loans are available to property owners and mortgage holders. This works as the money borrowed is secured against the property. If you were unable to repay the lender is then able to repossess the property.
These loans are much cheaper for people who have a good credit score. This is because you will get a lower interest rate than someone with a bad credit score. As you are seen as more likely to pay the loan back because with a bad score it is seen as more of a risk. So either will not be successful in gaining the loan or will have a much higher interest rate.
Secured loans can last for up to 20 years which lowers the monthly repayment costs on the loan. However the longer the loan lasts the more interest which is then being paid. As well as this the interest rates on a secured loan as appose to an unsecured loan are substantially lower at around 5-6%. Also if you own a property or have a mortgage you are more likely to be able to borrow larger amounts of money.
However, these kinds of loans can be very risky. This is due to the secured aspect of the loan with property and assets being the security for the lender.
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.
Example of Secured Loans
Rates from 4.5% APR variable. We have a range of lenders with rates up to 65.2% allowing us to help clients with a variety of credit problems. Typical 10.9% APR variable. Representative example: if you borrow £10,000 over 10 years at an Annual Interest Rate of 6.7% (variable) you would make 120 payments of £134.56 per month. The total amount repayable will be £16147.20. (This includes a lender fee of £495 and a broker fee of £1250 which have been added to the loan.) The overall cost for comparison is 10.9% APRC representative. Maximum APR 65.2%