A secured loan is a type of loan whereby the person requiring the loan (borrower) “secures” an asset of value against the loan amount required. As the loan is secured against this asset, the loan company (lender) may take possession of the asset in the event that the borrower defaults on the monthly repayments made to the lender, as per the terms of the secured loan agreement. The lender is then able to dispose of the asset in order to cover any amounts owed by the borrower.

A secured loan provides a lender with security, which effectively removes the financial risk to the lender. In return for this security, many lenders will offer more competitive interest rates or better terms on the loan. This often means that repayments on secured loans can be lower than unsecured loan repayments with less restrictive conditions on the repayment period.

A secured loan will generally enable a borrower access to larger loan amounts than an unsecured loan will. Secured loans also enable the borrower repay the loan over longer periods of time: the repayment term for most secured loans agreements can be anything up to 25 years.

Remember to think carefully before securing any debt against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other loan secured against your property.