A secured loan allows you to borrow money that is tied to one your assets – like your home or your car. If you’re looking to borrow a large amount of money over an extended period, then this might be a suitable option.
While secured borrowing products are generally cheaper than unsecured options (such as a personal loans), if you are unable to make the monthly repayments to the lender, as a last resort they can use the asset to repay the loan. There are several benefits to secured credit though, including increased borrowing amounts, lower repayment options and lower interest rates.
The difference between a secured loan and an unsecured loan
The main difference between a secured and unsecured loan is that you’re not borrowing the money against the value of one of your possessions with an unsecured loan. Typically, unsecured loans are usually for smaller sums of money than secured loans. Secured loans normally have much lower interest rates, as the asset used to secure the loan represent ‘insurance’ for the lender.
Each lender will have their own requirements for what can be used to secure the money against, in most cases it would be your home or car.
When should you consider a secured loan?
As secured loans often let you borrow a larger amount of money, it is not appropriate for unexpected expenses such as a boiler repair or an expensive MOT failure. Some examples of secured loans are:
- Mortgage loans
- Vehicle loans
- Secured credit cards
If a secured loan isn’t right for you, then you may want to consider applying for a doorstep loan from Morses Club. New customers can borrow from between £200 and £750 and you could have your funds in a matter of days.
If you’re interested in a doorstep loan from Morses Club, apply online today.