Secured Lending

Where can I Find a Secured Loan?

  • If you’re looking for the best deal for secured lending, shop loan rates from the top UK lenders.
  • Compare loans with Funding Market.

What is Secured Lending?


A secured loan is a loan where the borrower uses an asset such as property, machinery or vehicles as collateral for the loan. The collateral makes it a secured debt.

In a scenario where you’re unable to make loan repayments, the lender liquidates the assets to recover the amount loaned to the borrower.

Some loans are automatically secured such as a car loan. The lender can seize the car to recoup a bad debt.

Hence, the risk is minimal when compared to an unsecured loan that doesn’t require collateral. A lender won’t extend the unsecured loan but they will be willing to offer secured credit to protect their investment. This explains why a secured loan is cheaper than an unsecured loan.

What Are the Types of Secured Loans?


Homeowner/mortgage loans –

This is a loan that is secured against your property. It is usually for loans exceeding £25,000. The timeframe to repay the loan ranges from 3-30 years.

Logbook –

Secured against your car. The funds can be used to finance any business expense.

Vehicle finance –

Secured against a vehicle purchased under a finance agreement. You own the car after the finance is fully paid off.

A nonrecourse loan –

The collateral is the only claim or security the lender has against the borrower. There is no further recourse for any sum the borrower fails to pay back after foreclosure against the property.

Debt consolidation –

A loan secured against an asset, usually property to pay off existing debt. The asset used to secure the loan is seized by the creditor when the borrower doesn’t make payments.

Bridging loans –

A loan secured against a property. It is usually for large loans to bridge the gap with other loans being agreed. Where the borrower uses a mortgaged property to secure the loan, the creditor sells the property to pay the debt of the defaulting borrower.

How Does Secured Lending Work?


Similar to other types of loan, you agree on monthly repayments with your lender, plus any interest. Interest rate is calculated as a percentage of the loan. It could be flexible or fixed depending on the finance you’ve received. You won’t lose your asset if you make monthly repayments on time.

The lender is legally within their rights to repossess your home if you default on a secured loan. You may be able to negotiate an agreement if you communicate that you’re having trouble meeting your payments.

Avoid defaulting on your loan payments because it is recorded on your credit score. This makes it harder for you to access loan facilities in the future.

The Benefits of Secured Lending


You can stretch the payments for longer periods, up to 30 years. This makes it easier and more affordable to pay back the loan.

It’s easier to get approved for a secured loan even if you have poor credit or no credit history. There is a lower risk to the lender with your property as collateral.