Finding the right loan type for you can be difficult, particularly if you are facing a financial emergency and you have bad credit. if you own a valuable asset such as home or a car, then a secured loan may be a suitable option to help you. This is particularly useful if you require a substantial sum of money, due to the value of the loan being secured against a highly valuable asset. Whether you’re looking for a loan secured by property or simple want to compare the best secured loans on the market, turn to LoanPig today.
What Is A Secured Loan?
A secured loan is a type of loan often provided by financial institutions such as banks or car dealerships. These particular loan types require an asset to be secured as collateral against the loan, meaning if you fail to make the monthly repayments, then your asset may be repossessed by the loan provider.
Here at LoanPig, while we do not offer secured loans directly, we have the facilities available for you to effectively compare secured loans and other loan types in order to ensure that you find the best financial solution for your needs.
Secured Loans vs. Unsecured Loans
As mentioned above, secured loans are loans that require an asset to be secured as collateral against the funding. An unsecured loan on the other hand is a reverse of a secured loan. Lenders trust that you will be able to make the repayments and therefore you are not required to secure the loan against an asset or collateral.
An unsecured loan can include finance such as credit cards, personal loans, payday loans and other types of short-term loans. Generally, the interest rates are higher than secured loan rates as there is no asset to recover in case of default.
Generally, with a secured loan, you are offered lower secured loan rates, higher borrowing limits and longer repayment terms. When you compare secured loans, you can find the loan type that is most suited to your needs.
Types Of Secured Loans UK
Finding the best secured loans can be simple if you spend some time comparing the different types. Choosing the most appropriate secured loan based on your affordability and requirements can help you to make the right decision for you.
Some examples of secured loans include:
– A mortgage – this is a loan secured by property.
– Home equity line of credit
– Car loan or auto loan
– Boat loan
– Recreational vehicle loan
Some other types of secured loans UK include homeowner loans, bridging loans and debt consolidation loans.
At LoanPig, we offer unsecured loans suitable for those facing a financial emergency rather than loans secured by property or other types of assets.
What Happens If I Default On A Secured Loan?
If you default on a secured loan, then you may find that your asset will be repossessed by your lender, whether that is your home or your vehicle or another valuable asset. As with any financial product, if you were to default you may face a fee (depending on the lender) and your credit score could be impacted.
Warning: Late repayments or failure to make payment can have significant financial implications. Assessing your affordability before you apply for a loan (secured or unsecured) can help to avoid late repayments.
Can I Pay Off A Secured Loan Early?
Yes, you may be able to pay off a secured loan early depending on the lender. In some cases, you may face an early repayment charge but this will be discussed with you as part of the application process within the documentation provided. Comparing different options on the market can help you to find the best secured loans.
What Should I Consider Before Getting A Secured Loan?
Before you apply for secured loans UK, there are a few things to consider:
Affordability
Can you afford the monthly loan repayments based on the amount that you are looking to borrow and the length of time you are taking the loan out for? This is important to assess, to ensure that you can meet the monthly repayments. At LoanPig, we assess our applicants based on their affordability rather than their credit score, while we do carry out a credit check also.
Interest Rates
Many secured loan rates are variable, which you should take into consideration when working out your affordability. There may be some mandatory fees to also consider. The secured loan you are offered will be entirely dependent on how much you want to borrow, how long you want to borrow the loan for, the value of your collateral and your credit score.
When you compare secured loans, you may find a better rate or a loan type that is more suitable for your requirements.
Secured Loans UK FAQs
What Can I Secure My Loan Against?
Secured loans UK can be secured against a series of assets, depending on which collateral you own. Assets such as a house or a car are the common types of collateral which a loan can be secured against.
How Should I Manage My Secured Loan?
Ensuring that you make your secured loan repayments on time and in full will help to ensure that you do not lose your assets or damage your credit score. When you apply for a loan through LoanPig, our lenders will deal with the entire process once you submit your application. They will take the repayments directly from your bank account so you don’t have to worry about transferring this each month.
Will You Check My Credit Score?
When applying for any short-term loan from a reputable direct lender or broker, it is likely that your credit score will be checked. However, secured loans UK are often sought by those with a less than perfect credit score. At LoanPig, while we offer unsecured loans, we will carry out a credit check on our applicants, however we generally base our decisions based on your affordability rather than your credit score, as we understand that your circumstances may have changed.