Secured Personal Loan | Compare Secured Loan Rates & Borrow More in 2025
Compare secured personal loan deals and secured loan rates. Borrow for home improvements or debt consolidation with lower interest rates and flexible terms.
Related articles
What Is a Secured Personal Loan
A secured personal loan is a type of secured loan where the money you borrow is protected by an asset such as your own home, car, or savings. This means the loan is secured against something valuable you already own. With a secured personal loan, you can borrow money for various purposes, and secured borrowing allows access to larger amounts than many unsecured options. If you keep up with your repayments, you can enjoy access to a larger amount and sometimes a lower rate compared to other loans, as well as lower interest rates than you would with an unsecured loan.
Unlike an unsecured loan or a standard personal loan, a secured loan requires you to pledge an asset as security. This extra security gives the lender more confidence and allows you to borrow more over a longer loan term with potentially lower interest rates. Even if you have bad credit or a low credit score, you may still qualify for a secured personal loan. However, only those who own a home or another qualifying asset can access certain secured loans, as the asset is required as collateral to borrow money . For borrowers with a poor credit score or a limited credit history, this can open the door to better deals.
However, there is a clear risk with any secured loan. If you miss your monthly repayments, you could risk losing the property or asset you used as security. The total amount borrowed must be paid back in full, or the asset may be at risk. Understanding how secured loans work is important so you can decide if this type of loan fits your financial situation and allows you to borrow more money.
In simple terms, secured loans work by giving you the chance to borrow more at potentially lower interest rates. This is the essence of secured borrowing, which differs from other loans by using your asset to secure the loan for the lender, reducing their risk. But the trade-off is that your asset is on the line. By making regular repayments and planning ahead, you can take advantage of the benefits without putting your property at unnecessary risk.
When a Secured Personal Loan Can Help
A secured personal loan can be useful for major expenses like home improvements, debt consolidation, or clearing existing debts. Because the loan is backed by an asset, you may be able to access a larger amount than with an unsecured personal loan, which can make a big difference for larger projects.
For borrowers with a poor credit history or poor credit score, a secured loan can sometimes offer lower interest rates than an unsecured loan. This is because the lender sees the security as reducing their risk, so they may be more willing to approve your loan application.
Choosing between a secured or unsecured loan depends on your financial situation, your income, and how comfortable you are putting up an asset as security. If you want to borrow but prefer not to risk your property, an unsecured loan might be safer, but it usually comes with higher interest and a smaller loan amount.
Some people opt for a secured loan instead of increasing their existing mortgage because it can be quicker and simpler. It also lets you keep your original mortgage separate while still tapping into your equity to borrow for things like home improvements or debt consolidation.
Benefits of Secured Personal Loans
Secured personal loans offer several key benefits that can make them an attractive choice for many borrowers. Because the loan is secured against an asset, lenders are often willing to offer lower interest rates and larger loan amounts than you might get with unsecured loans. This can be especially helpful if you need to borrow a significant sum of money for things like home improvements or debt consolidation. Another advantage is that making regular repayments on a secured loan can help improve your credit score over time, as long as your circumstances allow.
How Lenders Decide on Your Loan
When you apply for a secured personal loan, the lender looks at a few key things: your credit score, your credit history, your regular income, and the asset you are offering as security. These factors help them decide the loan amount, interest rates, and loan term they’re prepared to offer you.
The loan-to-value (LTV) ratio is an important measure. This compares the size of the loan you’re asking for with the value of the property or asset you’re using as security. The more equity you have, the more you may be able to borrow, and the better your chances of getting lower interest.
Having a good credit score can mean you’re offered lower interest rates and more flexible loan terms. On the other hand, if your credit history shows missed payments or other issues, you may still be approved but with a higher interest rate or stricter conditions.
Be aware that lenders usually carry out hard checks which can temporarily affect your credit score. However, making regular repayments on time will help improve your credit history over the loan term, which can benefit you for future borrowing.
Loan Terms, Interest Rates and Repayments
With a secured loan, the interest rates can be fixed or you can have variable interest rates. A fixed rate means your monthly payments stay the same throughout the loan term, making it easier to plan your financial situation. Variable interest rates may start lower but can change, so your payments might go up or down.
The loan term – how long you take to repay the loan – affects how much interest you’ll pay in total. A longer loan term can mean lower monthly repayments, but you’ll end up paying more interest overall. Always check for any early repayment charges if you plan to pay the secured loan early, as these can add to the cost.
Costs You Might Not Expect
When you take out a secured loan, there can be extra costs beyond the basic interest rates. Some lenders charge arrangement fees, valuation fees or admin costs. These can increase the total price of the loan, so always read the small print before you borrow.
Remember that interest rates tend to vary depending on the loan term and your financial situation. If you have a good credit score, you may qualify for lower interest rates. If your credit history shows missed payments, your lender may add extra fees or higher interest.
Longer loan terms often mean lower monthly repayments, which can help you afford the loan, but you’ll usually pay more interest overall. Always check for early repayment charges if you plan to repay the loan sooner, as these can reduce the savings you hoped to make.
Risks and Things to Watch Out For
The biggest risk with a secured loan is losing your asset or property if you cannot repay. Always be realistic about what you can afford before you borrow.
Avoid taking a larger amount than necessary. A longer loan term can make monthly repayments smaller but may lead you to pay more interest overall. Balance the need for lower payments with the total cost of the loan.
Remember, secured loans work differently from an unsecured loan if you default. Missing payments can damage your credit history and lead to repossession. Taking time to compare loans and think about your circumstances can save you money and protect your credit score.
Security and Assets
A secured personal loan requires you to offer an asset as security. This could be your property, a vehicle, savings or another valuable item. The lender uses this asset as protection in case you fail to make your repayments.
If the asset you’re using is jointly owned, for example a shared property, both owners must usually agree before it can be used as security. This is important to check before you submit your loan application.
Repossession is the main risk with a secured loan. If you miss too many monthly repayments, the lender may take steps to recover the asset. Understanding the process and your rights can help you avoid unpleasant surprises.
Before you borrow, make sure you understand the value of your asset, your equity, and your legal rights. This will help you choose the right loan term and interest rates for your financial situation.
Debt Consolidation With a Secured Loan
Many people use a secured loan for debt consolidation. This means combining several debts into one loan with a single monthly repayment. It can make your finances easier to manage.
By rolling debts into one secured loan, you may be able to get lower interest rates and reduce your monthly payments. This can be especially helpful if your current debts are on high interest credit cards.
However, there is a risk. Turning unsecured debts into a secured loan means your property or asset is at stake. If you miss payments, you could lose it. Make sure the new loan term and costs fit your financial situation.
Think about the root causes of your debts before using debt consolidation. Without addressing the reasons, you may build up new debts even after you consolidate. Using the benefits of one monthly repayment is only effective if you also change spending habits.
Comparing Secured Loans
It’s vital to compare loans from different lenders before you sign anything. Look at interest rates, loan terms, and any early repayment charges. This will help you find a deal that matches your finances.
Online tools make it easy to compare offers. You can check secured and unsecured loan options side by side, read about monthly payments, and see which lender offers the best deal for your needs.
When you compare loans, don’t just focus on interest rates. Also check fees, flexibility, and the reputation of the bank or building society offering the loan. Reviews can show how they treat customers.
The more time you take to compare, the more likely you’ll find a secured loan with lower interest and fair conditions. This can save you money and protect your credit history over the long term.
How to Apply for a Secured Personal Loan
Applying for a secured personal loan is straightforward if you’re prepared. Most lenders will ask for proof of income, your bank account details, proof of property ownership, and a list of your existing debts.
Once you’ve submitted your loan application, the lender will carry out checks on your credit score, your credit history, and the asset you’re offering as security. They may also arrange a valuation if you’re using a property.
Timelines vary, but many lenders can approve a secured loan within a few days to a few weeks, depending on the loan amount, the type of asset, and the documents you provide. You’ll then receive the sum of money directly.
To improve your approval chances, tidy up your credit file, clear small debts, and prepare your paperwork in advance. This shows the lender that you’re organised and reduces delays.
Managing the Loan After Approval
After approval, set up a clear budget for your monthly repayments and regular repayments. Staying on track will keep your credit score healthy and avoid late fees.
If your finances changes — for example, if you lose your job or face unexpected costs — talk to your lender early. They may be able to adjust your payments or offer a payment holiday to protect your credit history.
If your income improves, consider making an early repayment to reduce your interest costs. Just check your agreement for any early repayment charges before you pay off the loan.
Ask your lender if they offer flexible terms to let you repay the loan faster. This can cut down the total interest you pay over the loan term.
Frequently Asked Questions: Secured Loans
Can I get a secured personal loan with bad credit?
Yes, you can. Secured personal loans are often easier to get if you have a low credit score, as lenders are more willing to offer you a loan when they have collateral to back it up. Still, the interest rates may be higher compared to someone with a good credit score.
What types of assets can I use as collateral?
The most high-value, secure commodity most people own is their home, so it's typically the main asset used as collateral. Cars or other high-value possessions can be used in certain situations, too. The lender will usually want to know the value of the asset to make sure it covers the loan amount.
Can I repay a secured personal loan early?
Yes, most lenders let you to repay a secured loan early. But it's essential to check the loan agreement, as some may impose early repayment charges. Paying early can save you money in interest, so it's worth considering if you have the means to do it.
Articles that might interest you
Can secured loans be consolidated?
Merging your loans into one could give you breathing space - but what if they're already secured against your home?
What are secured loans good for?
Powerful ways people use secured loans - and some unexpected ways they could help you.
Buy To Let Secured Loan on Property
Learn about secured loans for buy-to-let investors. Unlock equity to fund rental property purchases or improvements.
The details shown are for illustration only and may not include all lenders or products. Actual rates and terms depend on your circumstances and the lender’s assessment. Information was correct at publication but may change at any time.
