What is a Secured Loan?
When you borrow money in the form of a secured loan, the lender wants a guarantee that you will pay that money back. If you fail to pay the money back, the lender wants that guarantee to become compensation for the missing money. This guarantee – or security, as it is called – is most commonly your house, because your house is usually your most valuable possession.
For this reason a secured loan is sometimes known as a homeowner loan, although it may also be possible to borrow against your commercial or semi-commercial property.
So when the money is lent to you, the lender acquires an interest in your home not unlike the interest your mortgage company has. As long as you keep up your repayments, your home is safe and remains yours. If you fail to make your repayments, however, the lender can take your home – the lender’s security – away from you.
Interest Rates
Just as with any other form of financial borrowing, you will need to pay interest on your secured loan and it is impossible here to tell you what rate of interest you are likely to have to pay. That – like the sum of money actually available to you - will depend on your history, your immediate circumstances and on your ability to repay the loan.
The important things to note are that interest rates are not fixed and rigid, and that they are not stacked against you - you can obtain advantageous terms. It is certainly the case that if your credit history is poor you should be able to get a far better deal than with your credit card company.
You will find that a wide range of interest options is available - fixed rate, variable rate, discounted for a period, or even interest free for a period.
To find out what could be available to you in your particular and unique set of circumstances
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