If you are looking for a secured loan but don’t have any experience with borrowing, you will want to know a few key things. Secure loans can be fairly tricky, which is all the more reason to get the necessary information before moving forward. The worst thing you can do is to rush into this kind of decision. Getting a secured loan can help you buy a house, car or something else you need, but there is a lot to consider.

What is a Secured Loan?

A secured loan is a loan that requires some sort of collateral, which is property that can be taken by the lender in the event that you cannot make all of your payments on time. A mortgage is just one example of a secured loan. If you fail to pay back the loan, the lender is fully within their rights to foreclose on the house and sell it to cover the remaining cost of the loan. One missed payment usually isn’t enough to trigger repossession, but it depends on the lender.

Benefits of Taking Out a Secured Loan

There are numerous benefits to getting a secured loan, including:

  • Easy to get: Most secure loans are pretty easy for the average person to obtain. Even people with bad credit can usually get these loans. The collateral acts as security in the event that you cannot pay, so your credit isn’t so much of an issue. People with good credit usually get lower rates, but bad credit isn’t necessarily grounds for rejection.
  • Larger borrowing amounts: You can typically borrow more money with a secured loan. It is not uncommon for people who take out these loans to be given £75,000 or more. The amount that you are allowed to borrow depends on a number of things, including your credit and the lender.
  • Longer repayment periods: Because you are borrowing more money, you will have longer to repay the loan. This can sometimes work against you, as you will end up paying more interest over time. Having more time to pay back the loan can be a good thing though.


As discussed above, a mortgage is a type of secured loan. If you already have a home loan, you could possibly remortgage it to get a better rate. This is essentially a second loan on top of the original one. If you are having difficulty making your payments on time, this is something that you should at least look into. Lots of people have saved hundreds and even thousands of dollars remortgaging their home loans. This isn’t something that will work out well for everyone, but it’s still something to keep in mind.

Determining How Much to Borrow

It is very important that you know how much money to borrow with a secured loan. The very first thing that you need to do is to take a look at all of your current debts. You will only want to borrow as much as you can afford to pay back. You should ideally not have any outstanding debts when taking out a secured loan. Many lenders are hesitant to give out loans to those who already have active loans with other lenders.

Consolidation Loans

If you do have active debt that you are trying to pay down, you might want to get a consolidation loan. This type of secured loan will combine all of your debts into one manageable monthly payment that you will have to make. This could help you save some money by reducing the amount of interest you pay on a regular basis.

Fixed vs. Variable Rates

There are two different types of interest rates that you can get with a loan—fixed and variable. A vast majority of secured loans have variable rates, which means that they are subject to change over time. This can make the amount of interest you pay unpredictable, which can be unnerving for many people. A fixed rate loan is good because the rate never changes, but you could end up spending more in the long term. It is important that you take a close look at both of these options.

Where do I get a Secured Loan?

There are lots of different places that you can get a secured loan, such as from a bank, credit union or even a private lender. If you are going to go through a private lender, it is important to vet each one before making a final decision. These days there are tons of online-based lending companies to choose from. The more time you take to research these options, the more likely you are to get a great deal on your secured loan. Always remember that the lender you choose will affect your ability to pay back the money on time.