Secured Loans For Bad Credit

Struggling to access finance because of a bad credit score? Worried that a loan is out of reach? With Believe Loans, your credit history doesn’t matter. Our brokers can help you find a loan that aligns with your current needs and moves you towards future financial goals.

• We ensure your credit score doesn’t hold you back.
• Access a network of reputable lenders.
• Receive support from an award-winning team.
• Borrowing that’s tailored specifically to your needs.

Most loan providers will deny an applicant with bad credit or introduce stricter terms and higher interest rates. Having an unstable or limited credit history can flag you as a high-risk prospect for lenders, and they’ll balance out these risks by

As personal loans (also known as unsecured loans) don’t require any assets, your credit score plays a key role in the interest rates you receive, but secured loans are different.

When you apply for a secured loan, a bad credit history doesn’t have an immediate impact. Why? Because you’ll offer the lender security by offering up your home or another valuable asset.

If you default on a secured loan, the lender can recover the outstanding amount by selling your property.

How do secured loans for bad credit work?

Most lenders expect applicants to offer their home as security instead of other assets. Some specialist lenders might be willing to accept other valuable assets, but it’s rare. Here’s how secured loans work:

1. Asset Requirement: If you have a bad credit history, offering your home as security gives you access to better terms and interest rates. The amount you can borrow will depend on your equity and the lender’s LTV (loan-to-value) ratio.
2. Loan Terms: While poor credit might mean you pay higher interest rates, secured loans are usually more affordable than personal loans. As the lender has security, you can borrow more money and pay it back over years instead of months.
3. Loan Repayment: You’ll need to make each repayment on time and stay within the terms of your agreement. If you default or can’t repay the loan, the lender might take control of your home to recover their money.

If you want to take out a secured loan, you’ll typically have a choice between four types, depending on your needs, including:

Home equity and homeowner loans People usually take out homeowner loans against their current mortgage to pay for improvements or a deposit for a second property.

First-charge mortgages: If you currently don’t have a mortgage and use a lender to purchase a property, you’re technically entering into a secured loan agreement because failure to make your mortgage repayments will result in losing the property.

Second charge mortgages: While some think second-charge mortgages are the same as mortgaging a property, they’re not. You pay for a second charge alongside your pre-existing mortgage.

Debt consolidation loans: If you’re struggling to repay debt, consolidating existing borrowing into one monthly sum can make it easier to manage your money. However, it’s important to mention that not all consolidation loans are secured.

Before taking out a secured loan, consider getting financial advice and speaking to someone you trust who is not a lender to get their opinion on whether you should.

You may also want to speak with your bank or credit union about how they can help you with your finances, whether they have an affordable repayment plan for loans and any other services they offer.

Lenders are notoriously cautious about who they lend money to. But just because you have a bad credit score doesn’t mean you shouldn’t be able to access finance. If you can offer an asset as security, it’s easier to access a loan.

Evaluating your financial circumstances and assessing whether you can afford the loan can strengthen your application. It also depends on whether you meet the lender’s criteria, as loan companies will still look at other factors when deciding whether to accept your application.

Each lender will have different eligibility criteria for bad credit secured loans, including:

• Equity: The amount of equity you’ve built in your home is central to the lender’s decision. If you have a small amount of equity and already have other secured borrowing, such as a mortgage, you might struggle to meet the eligibility criteria.
• Credit History: If your credit report shows a history of struggling to manage debts, the lender might be more wary – even with security. Working with a professional broker reduces the risks of refusals, as we can access specialist lenders who specialise in bad credit loans.
• Ongoing Commitments: Your income and other financial commitments can also impact your application. For example, if you’re paying back other loans and have a low income or limited job stability, the lender might still view you as a high-risk applicant.

Is it easier to get a secured loan with poor credit?

While providers will likely deny an unsecured loan if you have a bad credit rating, offering security to the lender often means you can access a higher amount of money and low interest rates with a secured arrangement.

Still, secured loans are not guaranteed, and the lender might refuse your application if:

• You’ve been declared bankrupt in the past three years.
• You want to borrow more than 80% of the value of your collateral.
• You’re self-employed or have no fixed income source.
• You’re unemployed.

How much can I borrow with bad credit?

The amount you’ll be able to borrow depends on how bad your credit is and your regular income. We can’t give you an exact amount, but our specialists will be able to generate a ballpark figure during your consultation.

At Believe Loans, we help people find the right lender, regardless of their financial situation. Our friendly brokers can work with you to find a solution.

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Some other options are available if you’re unsure whether a secured loan is right for you but need to secure financing. However, you need to weigh up whether the following solutions will be more beneficial in the long term, as all lending situations can have some negative impacts.

Guarantor loan

A guarantor loan gives you more flexibility with the terms because someone is acting as a backup should you default on repayments. It’s similar to how many young people rent properties, but some avoid these loans because it can cause issues with family and friends.

If you fail to make repayments, your guarantor will become legally responsible, so if you decide to go this route, you should find a family member who will support you.

Zero-interest credit cards

While credit cards have a bad reputation, using them responsibly can be a lucrative solution for people. If you have a decent credit file, you can source a zero-percent credit card to buy something and pay it off in instalments.

However, if you don’t make the payments on time, you could be subject to high interest rates and have to pay more.

Peer-to-peer platforms

Peer-to-peer lending platforms are fast becoming one of the best ways to secure a loan. They work differently from banks, as individuals worldwide can choose to invest their money on a peer-to-peer lending platform.

It’s an alternative to putting your cash into a bank account, and platforms such as Zopa allocate that money to loan applicants. These platforms usually offer lower interest amounts, but they can be daunting for people without much financial knowledge.

Credit unions

British Credit Unions cater to a specific group, such as NHS workers or public servants. They offer loans and credit with more favourable rates and are similar to peer-to-peer lenders.

However, you’re not guaranteed a loan; it ultimately depends on your job, financial situation and whether a credit union caters to you.

Believe Loans specialises in helping people from all walks of life find the right loan solutions. As one of the UK’s top credit brokers, we partner with specialist lenders to find rates that align with your needs.

With a simple four-step process and secured loans ranging from £10,000 to £500,000, our team will support you throughout the process.

• We’re an Award-Winning Team: Believe Money is an award-winning finance broker dedicated to offering the best range of affordable loan options. We’re proud of our achievements but have no plans to stop striving for excellence.
• Receive Unparalleled Support: With a 4.9 average rating on Trustpilot, we maintain high levels of customer service, ensuring you have everything you need to access the best secured loan interest rates.
• Access Specialist Lenders: Search for a loan through mainstream channels and your options will be limited. Working with us gives you access to a network of secured loan providers who work with clients from all backgrounds.

Whatever you need a secured loan for, we’re here to help. Our specialist advisors are available Monday to Friday, so if you need any help, please contact us online or give us a call at 01302 591 360.