Compare secured loans for bad credit
If you struggle with a bad credit score, you might think that taking out a loan is off the cards for you. But that’s not true.
At Believe Loans, we can help you take out a loan, so why not compare secured loans for bad credit today, and see what deals you can get?
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Secured loans for bad credit
Secured loans are a popular way for people with bad credit scores to borrow money and it’s pretty easy to see why that’s the case. Not all loan providers offer the same interest rates or terms, so it’s important to compare secured loans for bad credit if that is something you struggle with.
Not all lenders are understanding of the fact that your own personal circumstances or things outside of your control might have contributed to your current credit record. If you’re someone who wishes you had a higher credit score so you could apply for a secured loan, you might be surprised to find out that it might not affect you as much as you think.
Secured loans could be a good option for you if you need to borrow a large amount of money, as they generally offer higher sums, subject to the value of the securing collateral (which we’ll touch on later), and you can usually get a lower rate of interest than with unsecured loans.
It’s important to be aware of the fact that the lender can repossess and sell your home (or other securing collateral) if you do not keep up the repayments on a secured loan.
What is a secured loan
A secured loan is one that has some kind of collateral behind it. If you default on a secured loan, the lender can repossess and sell the collateral to repay your debt to them.
This collateral is usually a property (which is why this type of loan is often referred to as a homeowner loan), but can also be something like a valuable piece of jewellery, a boat, some artwork, cash savings, or an expensive car.
While the lender won’t instantly repossess your home if you miss a payment by a day, but if you are ever at risk of falling behind, get in touch with your lender as soon as possible to see how they can help you keep on top of your loan repayments.
There are many different options for secured lending out there and it’s important to shop around for the best interest rates, loan terms and lender fees.
Consider getting financial advice and also speaking to someone you trust who’s not a lender to get their opinion on whether you should take out a secured loan.
You may also want to speak with your bank or credit union about how they can help you with your finances and whether they have an affordable repayment plan for loans, as well as any other services they offer.
How this is different from an unsecured loan
An unsecured loan is different from a secured loan in that it does not require any form of collateral to secure it with. Unsecured loans are typically given out by lenders based on their analysis of your credit rating, financial security and other personal circumstances.
A loan provider offering an unsecured loan will typically ask to see your payslip or bank statement, undertake a credit check to see that you have a very good credit score and reliable, constant employment, and whether you have any other debts outstanding before offering it.
Typically, an unsecured loan will be an option for borrowing money in smaller sums, with higher interest rates and quicker repayment terms. The overall cost of an unsecured loan is therefore usually greater than that of a secured loan because the lender is taking more of a gamble on your ability to repay them.
In both cases, the lender fee will be more relevant to the amount borrowed rather than the type of loan that you have chosen. However, you will still want to compare loans beforehand to ensure that you are getting the best deal out there before committing.
What is bad credit
Bad credit is a term that’s thrown around a lot, but what does it really mean? And how do you get a bad credit rating?
It all starts with your credit history, which is made up of the credit accounts and bank accounts you have opened and their associated balances. Your credit score is calculated based on this information, and it helps lenders predict whether or not you’re likely to repay them in full after borrowing money from them (or any other type of loan).
If you have a history of late payments or defaulting on loans, then your score will reflect that—and it will make it more difficult for you to secure new lines of credit. On the other hand, if you’ve always paid off your debts in full and on time, then your score will reflect that as well—and it will make it easier for you to get approved for new loans.
To get a bad credit rating, you need to have made some financial mistakes in the past. If you’ve ever missed payments on any of your debts, this can stay on your record for up to seven years (or in some cases more), which will also affect your ability to borrow money in the future.
So what does this mean for your prospects? Well, if you have a bad credit rating—even if it’s only because of one late payment—it means that lenders may not be willing to take a chance on lending money to you. That could also make it harder for you to get a rental agreement.
But at Believe Loans we know that circumstances outside of your control can cause these things to happen, which is why we offer secured loans for people even if their credit history isn’t as sparkling clean as they might want.
Bad credit secured loan
Secured loans can allow people with poor credit ratings to borrow money because the loan is secured against their home or choice of collateral, which they will agree on the value of with the lender in advance of taking out the loan.
This is why the lender is less concerned about whether the applicant has a poor credit rating or even their credit history at all, because they are lending based on the value of the collateral.
One of the biggest appeals of secured loans for a lot of people is that they allow applicants to get approved without having to deal with the issues that come with a bad credit score.
A secured loan can also be more affordable than some other kinds of loans because they don’t have as high-interest rates associated with them and the fees are generally not higher than what you would find on a traditional loan. So if you have some valuable assets that you can use as collateral, this is one of the best ways to get a loan.
Secured loan versus a mortgage
People with poor credit ratings often cannot get a conventional mortgage, which means they need to look elsewhere for borrowing money to buy or improve their home. A secured loan might be just what you need if:
- You want to borrow more than £15,000; and/or
- You have had problems repaying previous loans because of illness, redundancy or divorce; and/or
- You already own your own home but need extra cash for renovations or repairs; and/or
- You have been rejected by other lenders due to having too much debt already on other loans that are still open (this could include credit cards).
Secured loans offer a lower interest rate
If you’re looking to borrow a large amount of money, a secured loan could be a good option as it could let you get a lower rate of interest. The loan is usually secured against your home (why it is sometimes called a homeowner loan), so if you default on the loan then the lender can take their money back by selling your house.
This means that lenders are less likely to lend money than with an unsecured loan and therefore the rates will be higher – but this is because they are taking on more risk by lending to people who might not pay them back.
Secured loans tend to have longer terms than unsecured loans too (often five years or more), which means they cost more overall because they have a longer and more flexible end date than you would find with an unsecured personal loan or an overdraft for example.
Secured loans offer a lower interest rate
If you’re looking to borrow a large amount of money, a secured loan could be a good option as it could let you get a lower rate of interest. The loan is usually secured against your home (why it is sometimes called a homeowner loan), so if you default on the loan then the lender can take their money back by selling your house.
This means that lenders are less likely to lend money than with an unsecured loan and therefore the rates will be higher – but this is because they are taking on more risk by lending to people who might not pay them back.
Secured loans tend to have longer terms than unsecured loans too (often five years or more), which means they cost more overall because they have a longer and more flexible end date than you would find with an unsecured personal loan or an overdraft for example.
Your home is at risk with a secured loan
The big thing to be aware of is that the lender can repossess and sell your home if you do not keep up the repayments on a secured loan.
This also means that if there is no buyer, or if the sale price falls short of covering their costs, you can end up losing your home and having to move out into rented accommodation.
You will be responsible for any costs incurred by the lender if they have to resort to repossession proceedings and then put your property up for sale in order to recoup their losses.
These costs can include advertising fees, estate agency fees, legal fees and surveyors’ fees among others. That is another reason why it’s important to speak to a financial adviser before taking out a secured loan, so they can make sure that it’s the right option for you.
Why you might need a secured loan with bad credit
The most common reason that people opt for secured loans is for big expenditures that will pay back dividends, such as major home improvements, putting down a deposit on a second home, buying a vehicle for work, or investing in a business venture.
For example, if you are looking to buy a new work vehicle and have bad credit but have significant savings that can be used as security against your loan, then this option could work well for you.
However, if you are looking to borrow money for a holiday or to fund a new business venture that has little chance of repaying your loan, then it is unlikely that secured loans will be suitable for you.
Borrowers with bad credit scores can benefit from secured loans
So we’ve established that it can be a good option to get a secured loan if you need to borrow a large amount of money, but they can also be a good option if you’re trying to borrow a small amount of money because of the repayment terms and interest rates.
Secured loans are not just for those who want to buy property; they can be used for any purpose, but the lender will want to be assured that the investment is likely to aid the borrower in paying them back.
Still, secured loans are not guaranteed, and you may not be able to get a secured loan if:
- You have been declared bankrupt in the past three years
- You want to borrow more than 80% of the value of your collateral
- You are self-employed or have no fixed income source
- You are unemployed
This is another reason why you’ll likely want to compare secured loans before you apply for one. Each lender has its own criteria, so it’s worth getting a few quotes before choosing the best one for you.
Comparing different loans with bad credit or poor credit history
Secured loans can cost different amounts from different lenders even when you’re applying for the same sum with the same credit history and securing collateral. Lots of different companies offer secured loans which means that comparing loans with bad credit can be difficult, but there are some ways you can make it easier.
To find the best secured loan for you, first, look at the loan amount you can get, and the interest rates, monthly repayments, and lender fees offered by the lenders. You might find that your valuable asset isn’t as valuable as you think it is, or that you want to borrow larger sums of money than they are willing to offer you.
You should also compare the length of time before payments are due in full on the different secured loans, as well as any prepayment penalties applicable (fees charged if you pay back the money owed earlier).
Finally, look at whether or not each lender has a grace period before making payments due on your account because you might be surprised to learn that some will want their monthly repayments to start almost immediately. This will help you figure out what type of secured loan is best for your financial situation.
When comparing different loans with bad credit, it’s important to keep in mind that many lenders will require a third-party valuation on the collateral from borrowers with low credit scores in order to secure their loan requests.
It’s also helpful if applicants have steady employment records so they won’t have trouble paying back what they owe – otherwise they may end up defaulting on their monthly payments!
The last thing you want to do is waste time applying for secured loans that don’t fit your needs. Instead of doing this, it’s best to consider what types of loans are available and what each one offers (as well as any drawbacks). This way, you can find one that works for your financial situation!
Does my credit history mean that a secured loan is my only option
A bad credit rating can be really restrictive financially, so it’s great that there is an option for people to get a loan with bad credit.
Many borrowers will choose to get a secured loan rather than an unsecured loan if they have bad credit or personal circumstances that aren’t accepted. It is useful to get a credit report before going any further, to ascertain what options are available to you.
The bottom line is that you can get a homeowner loan or secured loan with bad credit, but you might need to shop around to ensure that you’re getting the best interest rate and try to find a fixed-rate secured loan, in which the monthly repayments will not rise above the rate of inflation over time.
How to get a secured loan with bad credit
At Believe Loans, we’ve been helping people with bad credit get a secured loan for years, and we offer some of the best rates on the market as well as being a really well trusted business by our customers with a 5 star rating on Trustpilot.
Whether you’re already comparing loans for bad credit or have just started to research secured loans, feel free to get in touch with our friendly team who will be able to help guide you through the process.
We consider applicants from all credit profiles and tailor each rate specifically for you, which can start from as little as under 4%.
Our hassle-free four-step online process can give you a good idea of what secured loan we can offer you, and you could be on your way to securing between £10,000 to £500,000 within just ten days.
We want to help as many people get the financial assistance that they need in order to make the investments that will improve their financial situation in the long term, so if you’re looking for a secured loan and are worried about it in any way, get in contact with us to find out what options we can offer you.
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We search our panel of lenders to find the deal that’s right for you
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When you confirm your chosen deal, we get your application moving
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The money lands in your bank
account – usually within two weeks
We compare loans from our panel of the UK’s top lenders to get you the best deal.
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