Bad Credit Secured Loans:

Getting a personal loan with a bad credit history is not easy as lenders are not sure you are a safe bet and will either deny you credit at all or ask you to pay extremely high interest rates.

Meanwhile, reasons for having bad credit can vary from bankruptcies, County Court Judgments and having a record of defaults on repaying previous loans or credit cards, to simply being self-employed or not having yet built any credit history at all.

In this case a secured loan can be a solution to the problem. Secured loans have a collateral in the form of the borrower’s property – usually a house, but some lenders will also accept a car as a collateral for smaller sums. Most lenders will give up to £25,000 and with lower interest rates if a loan is secured.

But it is important to remember that taking out a loan, secured against your home, you are running a greater risk of it being repossessed and sold if you fail to repay the owned amount. Also, secured loans usually go with longer repayment terms, which means that you will be repaying interest for a longer period and that the loan will cost you much more overall.

As an alternative to taking out a bad credit secured loan, one might consider turning to the credit union loans or trying to obtain a loan from a social lending site.