Secured Loans

Understanding secured loans

Secured loans differ from other forms of personal loans for the simple reason that the borrowers home is offered to the lender, as security against the loan. This is done for a number of reasons chiefly however the lender will require this additional level of security in order to offset the risk that this type of loan presents. Typically, secured loan applicants will be looking to borrow larger amounts over longer periods of time than they would with a standard personal loan.

What advantages do secured loans offer?

By far and away the biggest and most attractive advantage of a secured loan is the potential amount in which can be borrowed. Standard unsecured personal loan packages are usually restricted to an advance of no more than £10,000 (although a maximum of £25,000 maybe available through some selective lenders), secured loans on the other hand carry far fewer risks than a personal loan (from the lenders perspective) and are therefore privy to far higher advances (as much as £500,000).

Secured loans also offer far longer repayment terms than a personal loan, with some lenders offering a term that runs in tandem with that of a typical mortgage i.e. 25 years. Most personal loan packages do not come anywhere near matching this, with most lenders restricting their borrowing terms to around 5 years.

What can I use a secured loan for?

Secured loans can be used for almost any reasonable purpose (within the boundaries of the law). Debt consolidation tends to be one of the most common uses of a secured loan within the UK, and there are a number of reasons as to why this course of action makes sense: -

• Being able to borrow larger amounts means a person with many debts can consolidate all of them through a secured loan.
• Stretching the term over a long period of time has the effect of reducing monthly repayments (amount payable), therefore making debts more manageable.
• Secured loans can be sourced at very competitive rates meaning that through the consolidation of a series of more expensive debts into one, cheaper rate loan, the borrower can potentially save thousands.

In addition to consolidation, secured loans are also commonly used for home improvements (such as extensions, renovations and home remodelling), holidays, new car purchases and even cosmetic surgery.

What are the risks?

As a secured loan is tied to the borrowers home by way of a second charge, the biggest risk presented with this type of loan is that failure to stick to the terms of the agreement (meeting repayments dates on time and in full) may result in the repossession of the borrowers home. For this reason, it is extremely important for consumers to think long and hard before committing to a secured loan, but more specifically, to be absolutely sure that they can comfortably afford the repayments. Additionally, it is also important to know that home repossession is only ever considered by a lender as a last resort and should not necessarily act as a deterrent by default. Again, providing you have done your research, weighed up all of the pro’s and con’s, and planned as much as possible for unforeseen events, there is usually very little to worry about.

What features do secured loans from cheap loans offer?

We have a number of secured loan plans available to cheap loans customers, typical features of which can be defined as the following: -

• Cheap starting rates
• Quick in principle decision
• Fast track application process
• All employment traits considered
• Loans for any purpose
• Repayment breaks
• Terms from 5 - 25 years
• Loans from £5,000 to £250,000
• No Obligation quotation
• No application fees
• High acceptance rates
• More than 500 secured loan plans compared

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