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Secured Loans & Bad Credit

Are you dreaming of that renovation that seems out of your reach? Do you want to consolidate your existing debts and enjoy a brighter financial future?
  • Access to reputable lenders
  • Complete clarity on the loans
  • The support of a 2022 Mortgage Strategy Award winning team
  • A full range of borrowing solutions tailored specifically to your needs
  • Interest rates ranging from 2.99% to 23.5%

Secured Loans & Bad Credit: How to get a secured loan with poor credit history

Are you dreaming of that renovation that seems out of your reach? Do you want to consolidate your existing debts and enjoy a brighter financial future?

A secured loan could be the ideal solution – but what if your credit rating is less than desirable?

When dealing with bad credit, you probably think that loans and financing options are out of your reach. However, bad credit doesn’t necessarily mean you can’t secure a loan – especially if you find the right broker.

At Believe Loans, we help people find the right lender, regardless of their financial situations. Our friendly brokers can work with you to find a solution.

What is a secured loan?

Secured loans are highly beneficial for people who want to borrow a lot of money because they give lenders more security.

With these loans, you usually offer an asset as part of the loan, which means if you don’t make your repayments, the lender has the right to claim the money through your assets.

In most cases, people offer their property as security, and because a house is worth a lot of money, doing this can help you to obtain a bigger loan.

The types of secured loans

If you want to take out a secured loan, you’ll usually have a choice between four types, depending on your needs, including:

Homeowner and Home equity loans: People usually take this type of loan out against their current mortgage to pay for improvements or a deposit for a second property.

First charge mortgages: If you currently don’t have a mortgage and use a lender to purchase a property, you’re technically entering into a secured loan agreement because failure to make your mortgage repayments will result in losing the property.

Second charge mortgages: While some think second charge mortgages are the same as mortgaging a property, they’re not. You pay for a second charge alongside your pre-existing mortgage.

Debt consolidation loans: If you’re struggling to make debt repayments, consolidating existing borrowing into one monthly sum can make it easier to manage your money. However, it’s important to mention that not all consolidation loans are secured.

Secured loan agreement terms

On top of the different types of secured loans that are available, there are various repayment terms. In most cases, your lender will offer terms based on your current credit score, so you might not have an option with your interest rates.

However, it’s always best to ask about the repayment terms before you sign, as some lenders might be willing to offer you a more favourable agreement.

You’ll see three typical agreements with secured loans: fixed for term, short-term fixed rate and variable rate.

Fixed for term

Fixed terms are popular for people because they’re guaranteed stability with their repayments. With this type of loan, you pay a set amount each month instead of dealing with the uncertainty of changing interest rates.

Short-term fixed loan

Short-term fixed loans offer some stability because you pay a fixed rate for up to five years. However, after that term finishes, you’ll immediately move on to the lender’s variable interest rate, which could mean you pay more.

Variable rate

Variable rates are subject to The Bank Of England’s interest rates, so you’ll never know what you can expect to pay through the entire term of your loan. In some cases, this kind of agreement can be beneficial (if the interest rates decrease); however, many people avoid them because the interest rates can increase quickly.

Is a secured loan better than an unsecured loan?

When people decide to take out a loan, the most significant decision they have to make is whether a secured or unsecured loan is better. While secured loans require you to offer an asset to the lender, unsecured loans (personal loans) provide more flexibility.

With an unsecured loan, you won’t have to provide the lender with assets, but you’ll need a higher credit score.

When anyone wants to borrow money, the loan provider needs to know that they’re trustworthy, and an excellent credit score is the best way to show you’ll be able to make your monthly repayments.

Unfortunately, lenders are notoriously picky when offering an unsecured loan, so you might not be able to get one if your credit score doesn’t match the provider’s criteria.

If you have bad credit, secured loans might be the best option

In most cases, a secured loan is easier to get with a poor credit score because you can offer extra security to lenders. While providers will deny an unsecured loan if you have a bad credit rating, you’ll probably find that you can get a higher amount of money and low-interest rates with a secured arrangement.

However, if your credit report is negative, lenders might be less willing to offer you excellent terms, so it’s a case of shopping around and using a broker to get you the best possible loan.

If a lender does offer you a loan, they might increase the interest rates, so some people prefer to wait until they have a good credit score because the interest and agreement terms are more favourable.

The pros of taking out a secured loan with bad credit

While a personal loan might seem like a better agreement, a secured loan can have many advantages – even if you have a good credit score. However, before leaping, there are many things to consider, as committing to an agreement means that you’ll be responsible for the loan repayments.

Let’s look at the advantages of secured loans for people with bad credit.

You might be able to secure a bigger loan

As you can offer your house as collateral for a loan, lenders will usually be willing to lend more money.

For example, it’s rare to get an unsecured loan over £10,000, but secured loans are ideal if you want to renovate your property or invest in other expensive improvements.

These loans are easier for people with bad credit

All lenders will perform a credit check before offering their clients a loan, and if your credit record shows outstanding debts or financial problems, you won’t be able to secure most agreements.

However, a secured loan offers lenders peace of mind because if you can’t repay the debt, they’ll have the right to repossess your property and recover their money.

Self-employed people might struggle to get other loans

Even if a self-employed person doesn’t have a poor credit history, they might still find that lenders are wary of offering them a loan. A full-time job means a person has stability, but self-employed people count on themselves for income, which puts some lenders off.

Secured loans aren’t just bad credit loans because they can be beneficial for self-employed individuals to secure financing when they cannot guarantee a fixed monthly income.

Lower interest rates

Many unsecured loans offer a low-interest rate, which is ideal for people worried about their monthly repayments. As you use your property (or other valuable items) as collateral, most lenders will let you save money with lower monthly payments.

However, the interest rate you receive depends entirely on the type of agreement you secure and your personal circumstances.

The cons of secure loans

Of course, there are also some disadvantages of secured loans, and it’s essential to be aware of them before you enter into an agreement.

These loans are against your house

While other valuables are considered, secured lenders prefer property as it offers the most collateral. If you fail to keep up with the plan and your missed repayments mount up, you’ll probably lose your property.

For this reason, you should always consider whether the loan is a good idea because even a few missed payments can result in severe consequences.

Payment term

While secured loans offer lower interest rates, you’ll usually have a longer term to deal with. For some people, this isn’t a big problem, but considering these loans can sometimes last for 25 years, the interest rate can cost you much more in the long run.

Annual percentage rate of charge

Most lenders that offer secured loans will often add expensive arrangement fees, which they’ll calculate into the APRC. You’ll have to think about that before signing anything, as the added charge can dramatically increase your repayments.

Variable interest

Sometimes, a lender might offer you a secured loan with a variable interest rate, which means your payments might increase at short notice. If this happens, the overall loan amount you have to pay will be significantly higher.

Luckily, you can find a fixed-rate loan, but as these are more sought after, you might not have the option if you have bad credit.

Alternatives to secured loans

If you’re unsure whether a secured loan is right for you but need to secure financing, some other options are available. However, you need to weigh up whether the following solutions will be more beneficial in the long term, as all lending situations can have some negative impacts.

Guarantor loan

A guarantor loan gives you more flexibility with the terms because you have someone acting as a backup should you default on repayments. It’s similar to how many young people rent properties, but some avoid these loans because it can cause issues with family and friends.

If you fail to make repayments, your guarantor will become legally responsible, so if you decide to go this route, you should find a family member who will support you.

Zero interest credit cards

While credit cards have a bad reputation, using them responsibly can prove to be a lucrative solution for people. If you have a decent credit file, you can source a zero-percent credit card, allowing you to buy something and pay it off in instalments.

However, if you don’t make the payments on time, you could be dealing with high-interest rates and have to pay more.

Peer-to-peer platforms

Peer-to-peer lending platforms are fast becoming one of the best ways to secure a loan. They work differently from banks, as individuals worldwide can choose a peer lending platform to invest their money.

It’s an alternative to putting your cash into a bank account, and platforms such as Zopa allocate that money to loan applicants. These platforms usually offer lower interest amounts, but they can be daunting for people without much financial knowledge.

Credit unions

British Credit Unions cater to a specific group of people, such as NHS workers or public servants. They offer loans and credit with more favourable rates and are similar to peer-to-peer lenders.

However, you’re not guaranteed a loan; it ultimately depends on your job, financial situation and whether there’s a credit union that caters to you.

Do you want to find the best loan for your needs? Believe Loans can help you, whatever your credit situation is

Bad credit doesn’t necessarily mean you can’t secure a loan, but you might find it challenging if you go it alone. At Believe Loans, we work with people from all backgrounds to help them find the right borrowing solutions for their needs.

As one of the UK’s leading credit brokers, we have relationships with the biggest lenders in the UK, and regardless of your situation – we’re confident we can help.

Trying to find a loan with bad credit alone can result in unreasonable interest rates. You might even fall victim to the numerous sharks that pose as reputable companies, but you have a different agenda in mind.

When you work with Believe Loans, you can guarantee the following things:


  • Access to reputable lenders
  • Complete clarity on the loans you can receive and the rates you’ll pay
  • The support of a 2022 Mortgage Strategy Award winning team
  • A full range of borrowing solutions tailored specifically to your needs
  • Interest rates ranging from 2.99% to 23.5%

Contact us today for a free consultation

If you’d like to discuss the loan options available to you, please don’t hesitate to contact our friendly team of specialists. We’re always available to offer support and advice and can talk you through your bad credit situation.

Going it alone can result in higher fees, but our connections guarantee a better solution. In a few minutes, you could be on your way to a better future without the weight of debt hanging over you.


How much can I borrow with a secured loan when I've bad credit?

The amount you’ll be able to borrow depends on how bad your credit is and your regular income. We can’t give you an exact amount, but our specialists will be able to generate a ballpark figure during your consultation.

How can I find the right secured loan for bad credit?

Using a broker can ensure you find a loan that meets your needs instead of paying through the nose with an unreputable provider. The right loan for you is one that gives you peace of mind, and as we’re not a lender but brokers, we find the best solution for your needs.

How long will it be before I get my secured loan?

Depending on your financial situation, we can complete the process in around two to three weeks. However, in some cases, we’ll be able to sort out the entire application and complete the loan in a few days.

What can I use my secured loan for?

There are plenty of ways you can use your secured loan, but the most popular include:

  • Home improvements or renovations
  • Debt consolidation
  • Putting a deposit on a second property
  • Buying a new car
  • Paying for an important event such as a wedding
  • Raising capital for a new business venture

Believe Loans Ltd, FCA 786476, is an Appointed Representative of Believe Advisor Limited which is authorised and regulated by the Financial Conduct Authority under FCA number 841395.

How It works

Step 1.

Simple, easy application

Step 2.

We search our panel of lenders to find the deal that’s right for you

Step 3.

When you confirm your chosen deal, we get your application moving

Step 4.

The money lands in your bank
account – usually within two weeks

We compare loans from our panel of the UK’s top lenders to get you the best deal.


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Call from a mobile or Landline:

01302 358 160