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What is a secured loan?
The world of loans can be a confusing place. If you're just after some extra funds, it can be daunting trying to understand all of the financial jargon. So, we're here to explain what secured loans are and what they could mean for you in simple terms.
Simply speaking, a secured loan is what it says on the tin. They're loans which are secured by something you own – usually your home. This is why you might often hear them being described as 'secured loans' instead.
Benefits of Secured Loans
You can borrow more...
Many people find secured loans attractive because you can borrow large amounts. The amount you can borrow will vary from lender to lender, but to give you an idea, we offer secured loans from £10,000 to £100,000+
So, why can you borrow more with a secured loan than you could with a personal loan? Well, thanks to the extra security, lenders are more confident that you'll meet your payments on time – so they're happy to lend more.
You don't need a perfect credit score...
Even if your credit score is less than ideal, you could still borrow money with a secured loan. Because you've offered extra security in the shape of your home, lenders could be less worried that you'll miss payments. Good news if your credit history is a little worse for wear!
Pay less interest...
Interest rates – also known as the APR rate – come part and parcel with any loan. The interest rates you see will vary far and wide across different types of loans. Secured loans often have lower interest rates, meaning they can be a cheaper way to borrow money.
Why? It comes down to that added security again. Because your home is tied to the loan, lenders don't see you as a 'risky' borrower, so they won't charge you costly interest fees.
Longer repayment period...
Secured loans can have lengthy repayment periods. Some secured loans can last for up to 25 years, so you have plenty of time to repay the loan.
What does this mean for you? It could free up your monthly budget, as a longer term often means lower monthly payments. On the other hand, you could pay more interest over a longer period of time – so it's worth weighing up these points before you apply for your secured loan.
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