Secured loans are an attractive option for people with bad credit, as they can be far easier to obtain than unsecured loans and other types of credit. This does of course depend on individual circumstances. Secured loans are available to suit people with a range of financial circumstances, including those with County Court Judgements (CCJs) against their name. If you have bad credit and are thinking of applying for a secured loan, there are several things you need to know.

Secured Loans

A secured loan is a loan that you guarantee by securing it against your home, property or other collateral. Unlike with an unsecured loan, the lender has a guarantee of repayment, which means that you can often borrow more on a secured basis. However, if you are unable to keep up with your loan repayments, you risk losing your home, property or possessions.

Bad Credit Secured Loans

As there is less risk or lenders defaulting on their repayments on secured loans, lenders are much more inclined to give loans to people with bad credit or a poor credit history. Loan providers like Creditlink offer secured loans to people with bad credit, including those with County Court Judgements. If you have trouble getting credit or have been refused an unsecured loan, a secured loan may be the solution to your problems.

Qualifying for a Secured Loan

In order to qualify for a secured loan, you must be at least 18 years of age, although some loan providers have additional age restrictions, such as a higher minimum age or set maximum age. You must also own your own home which can be used to secure your loan. Many loan providers also have their own requirements for loan applicants, such as a minimum income amount, stable employment status or other set condition.

Advantages of Secured Loans

Secured loans are available to suit most financial circumstances, making them more accessible than other types of loan. In most cases, you can also borrow a larger amount of money on a secured basis than on an unsecured basis. Secured loans can also usually be paid back over a longer time period than with other loans, especially if you want to borrow a large amount of money. The Money Advice Service provides detailed information on the difference between secured and unsecured loans.

Disadvantages of Secured Loans

Secured loans work out more expensive than unsecured loans, as they usually have higher interest rates and payments are spread over a longer period of time. Payment terms associated with secured loans are often inflexible. For instance, early repayment of the loan usually entails at least 30 days written notice, you can be charged approximately a month’s interest on cancellation and the whole procedure could take about 2 months. With a secured loan, you also risk losing your home or property if you don’t keep up with the repayments.

Before applying for a secured loan, it is important to weigh up the advantages and disadvantages of the loan. Read the small print carefully to make sure that you understand the terms and conditions.

Ceri Harris is a personal finance consultant. Her articles mainly appear on money saving blogs.