The Complete Guide to Secured Loans

Finding a loan isn’t always easy, especially if you have a bad credit score. Still, secured loans are often one of the more accessible options out there. With a secured loan, the borrower puts up some sort of collateral to “secure” the loan, such as a house or a car. This adds risk to the loan, but it also makes it easier to get if you have poor credit.

If you’re interested in secured loans and ask yourself questions like “Should I get a secured loan” and “Can I get secured loans with bad credit?” this guide will help. We’ll look at an easy-to-understand definition of secured loans, as well as going over the key features of how these loans work, their pros and cons, and so on.

What Are Secured Loans?

Let’s start with an explanation of secured loans to find out what they are. As the name implies, a secured loan has some sort of security attached to it. This means that when you apply for secured loans with secured loan lenders in the UK, you’ll have to offer some sort of collateral. This could be your home, if you own some property, or something smaller, such as your car or some jewellery.

The act of “securing” the loan is a way of showing the lender that you will pay them back, whatever happens. Usually, you should be able to make your regular payments to get rid of your debt. But if you cannot do so, the lender will be entitled to repossess the property you used to secure the loan.

Comparing Secured and Unsecured Loans

When it comes to secured loans vs unsecured loans, it’s essential to understand the differences and distinctions between the two. The main difference is that, with an unsecured loan, you don’t have to provide any security or collateral. Therefore, you won’t be risking your home or car if you can’t keep up with the repayments.

There are some other differences between the two, primarily in terms of accessibility, amount, and rates. Secured loans can often be obtained for more considerable sums, and it might be possible to get good secured loans APR, as lenders will be willing to provide more attractive interest rates in these cases. With unsecured loans, there’s a wider range of APR and stricter eligibility requirements.

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Features of Secured Loans

Secured loans can be pretty varied in terms of their features, like rates and eligibility requirements. This is because there are a lot of lenders of secured loans out there. They each have their approach to their secured loans, with their own rules and ideas in place. So, the type of secured loan you get will depend on the bank or lender you contact. However, although the specifics can vary, secured loans tend always to involve the following key features.

  • Secured Loans Amounts

    Typically, you can borrow anywhere from £5,000 to £100,000 with a secured loan, although some banks go up to £500,000. The total amount you’re allowed to borrow will depend on various factors. These factors include your current financial situation, the value of your collateral, and the lender’s own rules and policies.

  • Secured Loans Low-Interest Rates

    As mentioned earlier, secured loans often have relatively low-interest rates when compared to unsecured loans equivalents. However, the APRs can vary a lot from lender to lender and bank to bank.

  • Collateral for Secured Loans

    As detailed above, secured loans require some form of collateral or security. But you might wonder, “What types of collateral can I use on a secured loan?” Well, the most common option is to put up the equity you own in your home or other property. You might also be able to use your car or other valuable items. Businesses, for example, could submit their inventory as collateral when applying for secured business loans, while individuals wanting personal secured loans could provide valuable items like art, jewellery, or collectables.

Types of Secured Loans

When it comes to the types of secured loans in the UK, there are three main varieties:

  • Fixed: With a fixed secured loan or fixed for term secured loans, you’ll pay a fixed amount every month for the entire term of the loan’s repayment. Your payments won’t change at any point, making it simple to always know how much you owe.

  • Short-term fixed: With a short-term fixed-rate secured loan, you’ll pay a fixed amount for a short-term period (usually up to the first five years of the repayment plan). After that, a variable rate will take effect, and the cost of your payments could go up or down.

  • Variable: With variable-rate secured loans, the interest rate you pay will change over time. It might go up, leading to more expenses for you. But it may also go down, resulting in a better deal for you.

Secured Loan Advantages and Disadvantages

There are both pros and cons to consider when asking oneself, “Should I get a loan to consolidate debt?”


  • Accessibility: One of the main advantages of secured loans is that they’re more accessible to people with bad credit. If you can’t get an unsecured loan for bad credit, you may be able to get a secured loan.
  • Better Rates: It’s often the case that secured loans have better rates than unsecured loans. So you may pay less interest in the long term.
  • Building Credit Score: If you have a bad credit score, getting a secured loan and paying it off successfully is a good way of building up your score.
  • High Amounts: It’s possible to obtain secured loans for very high amounts, especially when compared to standard personal loans.


  • Big Risks: Secured loans are classed as very risky. If you don’t make the payments, you won’t just risk a hit to your credit score; you may also lose your home or anything else used as collateral.


What are secured loans UK?

Secured loans are loans that involve some kind of security or collateral being put up by the borrower, such as their home or car.

Can you get secured loans with bad credit?

Yes, it’s possible to get a secured loan for poor credit in the UK. This can be a good loan option for people with bad credit scores.

Are secured loans easier to get?

Yes, compared to unsecured loans, it’s usually easier to obtain a secured loan if you have a low credit score. But you still need to own some assets or property to use as collateral.

Do you get better rates on secured loans?

Often, yes. Secured loans usually have lower rates than unsecured direct lender payday loans UK.

Secured Loans and Bad Credit

So is it possible to get secured loans for bad credit in the UK? The simple answer is yes. Secured loans are actually recommended to people with poor credit scores, as they’re usually more accessible with banks and lenders than unsecured loans.

By providing collateral for bad credit secured loans, you have an extra way of showing lenders that you’re willing and able to keep up with the repayments. You’ll be taking a greater risk, too, but if you keep up with payments, you can build your credit score with the help of a poor credit secured loan.

Representative example

Total amount of credit: £700
Duration of the agreement: 6 months
Repayment total: £1,179.05
Interest is Fixed at rate of 185.39% per year | Representative 611.74% APR
Installment 1
Installments 2 — 5
Installment 6