Secured Loans For Bad Credit
Getting A Secured Loan With Bad Credit
If you have a bad credit history, you may struggle to access loans when you need them. Secured borrowing can provide an ideal solution, allowing you to take out a loan even if you have a less than perfect credit history, including CCJs.
What is a secured loan?
A secured loan is a loan which is tied to the value of an asset, usually your home. This means the amount you can borrow depends on the value of the asset. You can normally borrow up to a certain percentage of your home’s value and this percentage is known as your loan-to-value ratio (LTV).
Advantages of secured loans for bad credit
Even if you have been rejected for other types of borrowing, a secured loan can be an option. This types of borrowing offers several advantages:
- Seen as lower risk by lenders, so you are more likely to be approved
- Often allows you to borrow more than with unsecured borrowing
- Can offer more attractive interest rates
- May allow you longer to repay
As with any type of secured borrowing, however, it is important to bear in mind that if you fail to keep on top of your repayments your home could be at risk.
How much can you borrow with a secured loan?
The amount you can borrow as a secured loan will depend on a number of factors, including:
- The value of your home
- How much, if any, debt you already have secured against your property
- Your income
- Your credit rating
The amount different providers will be willing to lend varies, but in general loans of anywhere from £10,000 upwards are common.
How much will a secured loan cost?
The main cost of a secured loan is the monthly repayments. These usually cover the interest on the loan and repaying a proportion of the capital. However, some lenders may offer the option of an interest-only loan where you repay the capital at the end of the loan term.
If you have bad credit, this is likely to affect the interest rate you are offered, but by taking out a secured loan you will normally get a better rate than you would with unsecured borrowing.
The main things which will affect your interest rate are:
- How much you need to borrow
- How long you want to repay over
- Your loan-to-value ratio (LTV)
- How much debt you already have
- Your credit rating
Find the best interest rate on secured loans for bad credit
When looking for a secured loan, one of the main things to look for is the interest rate you will pay. Interest rates vary considerably between different loan providers and this can make a big difference to your monthly repayments and the total amount you end up repaying
The loan comparison table at the top of this page offers a fast, simple way to compare deals on secured loans from all the leading lenders. We regularly update this list with carefully selected loan deals that offer great value, allowing you to find a loan that matches your needs and finances.