Secured loans are a type of loan where the borrower provides collateral, such as property or assets, to secure the loan. The collateral works as security for the lender, reducing their risk in case the borrower cannot repay the loan on time.
If the borrower defaults on the loan, the lender can seize and sell the collateral to recover the outstanding balance of the loan. For example, if a borrower is unable to pay a loan secured by their property, the lender will seize the property.
A secured loan requires collateral to secure the loan, while an unsecured loan does not. Because secured loans involve collateral, they generally have lower interest rates and higher borrowing limits compared to unsecured loans.
Unsecured loans, on the other hand, are not tied to specific assets. These loans typically rely on the borrower’s creditworthiness as a means of risk reduction for the lender.
Yes but you should not use a secured loan as a means to build credit, as there are far less risky ways of doing so. By consistently repaying your secured loan on schedule, you will show responsible borrowing behaviour, which can positively impact your credit history and credit score. If you default on the loan, it can have a negative effect on your credit, on the other hand.
Yes, a secured loan can potentially affect your ability to remortgage. When you apply to remortgage your property, the new lender will consider your existing secured loan as part of your overall debt obligations. This can affect their decision to approve your remortgage, or affect the terms.
Yes, potentially. If you have an existing mortgage and you take out a secured loan, it becomes an additional debt secured against your property. This means that in the event of default, both the mortgage lender and the secured loan lender would have a claim on your property’s equity.
A shared secured loan is a loan where the borrower provides collateral jointly with another individual. For instance, a family member or a friend.
Both parties share the responsibility of repaying the loan, and if one of them defaults, the lender can seize the shared collateral to recover the debt.
Common documents typically include identification (such as a passport or driver’s license), proof of income (pay stubs, bank statements), proof of address (utility bills, rental agreement), details of the collateral being used, and any other supporting documentation requested by the lender.
The specific collateral accepted by secured loan lenders may vary, and the value and condition of the collateral can also impact the loan terms, but common collateral include:
Yes! While it may be more challenging to obtain a secured loan with bad credit, Deedle will still help you find a lender who can consider your application. Lenders may be willing to consider your application if you have sufficient collateral and can demonstrate the ability to repay the loan.
Yes, but it is not always a good idea. Pensions are designed to provide income during retirement and are subject to strict regulations. Withdrawing or using your pension as collateral may have significant tax implications and could impact your retirement savings.
Yes, secured loans generally have lower interest rates compared to unsecured loans. The presence of collateral reduces the lender’s risk, allowing them to offer lower interest rates.
Generally, it can take anywhere from a few days to a few weeks to complete the loan process, but this can vary between lenders.
No. While PCP involves regular monthly payments and collateral, it is not technically a loan. PCP is a form of hire purchase, where the borrower pays monthly instalments to use the vehicle for a fixed term.
Yes, secured loans can typically be used for a variety of purposes such as:
In this case, the lender has the right to take legal action to recover the debt. This can include seizing and selling the collateral to repay the outstanding balance. If you are struggling with paying your debts, there are options available to help you.
Yes, it is possible to get secured loans if you are self employed. Simply complete Deedle’s enquiry form to find out more today.
