Bank loans for bad credit almost always charge you a higher interest rate than if you had a fair or good credit rating. This is because the bank needs to protect the extra risk it's taking in lending to someone with a poor credit history.

However, when it comes to secured loans bad credit doesn't have to go hand in hand with unaffordable rates. In some cases a bad credit secured loan could be a good option.

If you are looking for a loan with bad credit, offering your home as security reduces the lender's risk so they can afford to charge lower rates than you'd get on unsecured borrowing.

Whether you want debt consolidation loans for bad credit or you want to borrow to buy a new car, this means poor credit secured loans could be your cheapest and most available source of borrowing.

To get the right loan for you, you'll need to establish a budget and work out your priorities before you apply.

How much money do you need to borrow?

Consider the size of loan you need and what you need it for. You should always try to borrow the minimum amount you can; however if you want to start paying off existing debt it may be a good idea to include some contingency when you compare monthly instalment lenders are willing to give you.

Once your budget is set, compare it to each lender's minimum/maximum loan amounts to filter out any unsuitable loans.

It's likely you'll only be able to borrow an amount that equals the equity you have in your property because this is the part of your home that you own outright.

You can work this out by comparing the value of your property to the mortgage you have outstanding - the difference is the maximum amount you're likely to be able to borrow. If you have other loans secured on your property you'll also need to deduct this amount.

What loan term do you need?

The duration of your loan is more likely to be negotiable than the basic amount you need to borrow. Most lenders provide loans for between 3 and 25 years, although some may offer different terms.

Consider what amount you can afford to pay back each month, and how long it would take you to pay your loan back in full based on that figure. You can then compare your minimum loan term to the options offered by individual lenders to find relevant products.

What security can you use?

In very rare cases a lender may allow you to use your car as security, although it is a lot more common for loans to be issued to those who own their own home.

A loan secured on property means the bank can repossess your house as compensation if you were not able to keep up with repayments.

This means you should only consider taking out home credit loans if you're confident you won't have problems with repayment otherwise you could face losing our house if you fall behind.

In some cases it might be worth getting a form of income or illness cover to protect your repayments.

Getting the best interest rates

Once you have found which loans match your specific needs, you can use our secured loan bad credit comparison table to compare how much they cost. Overall, even secured loans for very bad credit can be affordable if you shop around and compare loans that match your specific priorities.

Bear in mind that long term loans with bad credit may receive lower interest rates, but over a long period they'll add up to being slightly more expensive. So, aim to balance what you can afford to pay monthly against paying the balance off as quickly as you can to get the best deal.

To find out more take a look at our guides How to Get the Best Consolidation Loans and Can You Get an Unsecured Loan with Bad Credit?

About our loans comparison


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