The Expected And Unexpected Elements of Secured Loans

Going for the loans is all about to fulfill the basic needs and subsequently, it also about dealing with unexpected expenses.

In both situations, loans are useful and can be used as the secondary source of income along with your regular monthly earnings. However, you should be familiar with the two ways of applying for the loans.

Secured loans and Unsecured Loans…

In the secured loans, the borrowers have to put an asset as the loan collateral and to secure the loan amount. With that, they have the liberty to apply for a large amount and a more extended duration. The rates of interest become less because collateral is there. If the asset is valuable, people with poor credit score can also seek approval.

In unsecured loans, borrowers have the chance of borrowing funds without putting anything in the form of the collateral. Here, the borrowing limit becomes less, and the overall loan duration gets shrink. The interest rates are generally on the higher side, but lenders are also offering them as bad credit loans with no guarantor required.

Clearly, with the advantage of low-interest rates, secured loans gain the upper hand, and with the security given, the chances of loan approval increase automatically.

Let us take our discussion further on the secured loans.

Types of Secured Loans

The loans that have been secured by any valuable asset are available in multiple forms. A few of them are gaining an explanation here.


Yes, this is the perfect example of the secured loans. However, both concepts have a slight difference. Still, they are part of each other’s fulfillment.

When someone goes for the mortgages, the borrower has to put something as security. It may be in the form of the deposit given or the papers of the property. Suppose the borrowers unable to repay, the lender takes the possession of the security to compensate its amount.

Purchasing a home is everyone’s dream, and the way of mortgage will help in accomplishing that dream.

Nevertheless, your credit score is expected to be good, but these days some lenders are providing a mortgage for bad credit people too, but with a higher deposit.


Another form of secured loans is a long term loan. Yes, this option has the advantage of getting considerable funding for both personal use and for business needs.

The duration of the loans can go higher up to 10 years, and the amount (although it varies to the lender to lender) can go between £50000 and £100000.

For personal use, the amount is decided according to individuals earning capacity, both monthly and annually. On the other hand, the amount for business purposes is analysed as per the yearly revenue of the company.

As long term loans are the secured loans, the low-interest rate is what you can expect.


The logbook loans also fall into the category of secured loans. Here, the borrowers have to secure the borrowed amount via a vehicle or car. The asset must be your car if you want to avail of the loan.

The lender will decide the amount that you are eligible to borrow according to the current value of the car. It is because if you fail to repay the amount, the lender can compensate almost the full amount that it would lose.

With the car kept as the loan collateral, the rates of interest are naturally on the downside, and the chance of borrowing a large amount becomes a reality.

The small monthly instalments due to the longer loan duration are also manageable from your salary, and your credit score to gain higher ratings.

The Upside and Downside of Secured Loans

Every loan option does have advantages and disadvantages. It applies to the secured form of personal loans too. Please continue to read below.

Secured loans are advantageous in the following ways:

  • Sometimes you need a large amount as the backup to your monthly salary or your business profits. In such situations, these loans are helpful as they remain with you for a long time.
  • Paying the high-interest rates to hurt more, and it puts more burdens on to your monthly budget. By applying for the secured loans, you can ease out that pressure and pay lower interest rates. It is because you have secured the amount.
  • With these long-term loans, you have the chance of getting more genuine deals from the lenders, who have an excellent reputation in the marketplace.

Secured loans may not prove beneficial in these points:

  • The fear of losing out the collateral is always there. Suppose you lose out your employment in the midway and now repaying the amount becomes challenging. If you do not pay, then you lose your asset.
  • The longer duration may become a burden to your overall financial balance. You are going to pay for as long as 10 years. It will put an extra load on your income, and you might not be able to save money for your kids.
  • If you are not able to make the repayments, your credit score gets mainly affected. You cannot live with adverse credit ratings for a long time. Most of the lenders hesitate to offer you loans with such a very poor credit score.

Therefore, secured loans are the best option only when you require fulfilling a major dream-like purchasing a new home, business expansion, or buying a new car. For urgent or smaller needs, taking out small and easy loans would be the precise decision to make.

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