• >
  • Loans>
  • Secured loans for bad credit

Compare secured loans for bad credit

Get a secured loan even if you have bad credit

If you're a homeowner, but have a less than perfect credit history, a secured loan may be a better option to get a lower interest rate

Get a secured loan with bad credit

Compare secured loans and see if our best deals are right for you
Calculate the amount you need to borrow and how long you will need to repay the loan.
It's vital to makes sure you check which loans you're more likely to be accepted for, especially with bad credit.
Comparing loans online will ensure that you get the best deal for your needs.
Last updated
March 12th, 2024

What is a secured loan for bad credit?

A secured loan for bad credit is the same as a standard secured loan, except that it's designed for people with a poor credit history.

Secured loans are sometimes known as second charge mortgages or homeowner loans, because they are often secured against your property – although, in truth, they can use any valuable asset as security. This could include your car or a motorbike.

If you can't pay back the loan, the lender has the right to take possession of whatever you've put up as security, then sell it to recover what you owe.

The amount you can borrow will depend on your property value, income, and financial circumstances, but secured loans can be for anywhere between £5,000 and £2.5 million.

But if you have bad credit, it's likely that you won't be able to borrow as much as you could with a good credit score.

This is why, unless you need the money urgently, it may be worth working on improving your credit before opting to get a secured loan.

How your credit score affects your borrowing

Can I get a secured loan with bad credit?

The short answer is yes, in fact it's often easier to get a secured loan with bad credit than a typical personal loan because the lender has something to back up your promise to repay with.

That means secured loans for bad credit are available to people who have:

  • Mortgage arrears

  • County court judgements (CCJs)

  • Other missed credit payments

Secured loans for bad credit usually come with higher interest rates and fees than are available to people with a good credit score, so they're typically more expensive. They also mean the asset you are securing them against is at risk if you fail to keep up payments.

This means that in some cases you may be better off raising the credit you need with a bad-credit credit card or work on improving your credit and get a personal loan, where your home or other asset is not at risk.

How to find the right secured loan for bad credit

Finding the right secured loan for bad credit can be challenging, but it's not impossible. Here are five steps to help you find the right secured loan for bad credit:

Check you credit report

Start by obtaining a copy of your credit report and credit score. This will give you a clear understanding of your credit situation and help you identify any errors that need to be corrected. If there are errors on your credit report, dispute them to improve your credit score.

Work out how much you need to borrow

Decide how much money you need to borrow and what you'll use the funds for. Having a clear purpose for the loan will help you narrow down your options. Determine the loan term (how long you want to repay the loan) and your monthly budget for loan payments.

Compare lenders

Look for lenders that specialise in providing secured loans for individuals with bad credit. Online research, reviews, and recommendations from friends or family can help you identify reputable lenders. Check interest rates, fees, and loan terms offered by various lenders. Compare these factors to find the most favorable terms for your situation.

Prepare your collateral

Since secured loans require a security make sure you have a valuable asset to use, typically your home or other property. Ensure that your collateral meets the lender's requirements, including its value, condition, and ownership documentation.

Apply for the loan

Be prepared to provide detailed information about your financial situation, including your income, expenses, and the collateral you're offering. When you receive loan offers, carefully review the terms and conditions. Pay close attention to the interest rate, loan duration, and any associated fees. Before accepting any loan offer, make sure you fully understand the repayment terms and any potential consequences if you're unable to repay the loan.

Do I have to use a broker?

In many cases, yes. That’s because the majority of lenders only work through brokers, so you can’t directly apply to them for a secured loan.

There are advantages to using a broker though. Firstly, they’re often able to provide an indication of the likelihood of your application being accepted before you apply.

As well as checking your circumstances – including any potential problems with credit – a good broker can also help you track down a loan suitable to your specific needs.

Pros and cons


Receive funds quickly, many transfers are done within 24 hours
Lenders may be prepared to lend you more money because loans are secured against your property
You may be able to improve your credit record if you keep up with repayments


A poor credit history means your loan is likely to cost more overall because lenders usually charge a higher level of interest
If you’re unable to meet your repayments or default on the loan, you could end up losing your home

Things to know before you take on secured debt

A poor credit history means you’re already financially vulnerable, so it’s important you understand how serious a commitment it will be to take out a bad credit secured loan.

With this in mind, make sure you:

  • Don’t borrow more than you need

  • Understand how long you’ll need to pay the loan back

  • Can afford the monthly repayments on top of your regular outgoings

It’s also a good idea to check your credit record is both up to date and accurate before you go hunting for secured loans for poor credit – even if you’ve not previously run into problems.

For those with bad credit, secured loans offer an avenue to borrow despite their credit status. At the same time they offer a chance to regain financial stability and improve creditworthiness over the long term.


Do I have to pass a credit check to get a secured loan?

Yes, you will always be credit-checked when you apply for a secured loan. This is why you may wish to use a broker to conduct a soft search that verifies whether you will be accepted for the loan you want before formally applying. Soft searches don't affect your credit record.

How long does it take to get a secured loan?

In most cases, the money will be transferred to your account 10 working days after you make your application.

Do I have to be a homeowner to a get a secured loan?

No. Although most secured loans are only available to people who own their own home, some lenders will let you secure the loan with other assets – such as a car or motorbike.

Who will value my property?

Your property will be valued as part of the loan process. This is typically arranged by the lender and paid for by you. The valuation is carried out by a chartered surveyor.

Can I pay off a secured loan for bad credit early?

Generally, yes. But doing so will cost you. While quite a lot of lenders allow for early repayments, the ones that do often impose an early repayment charge for doing so.

When you take out your loan make sure you check the terms and conditions to find out what the early repayment rules are.

In depth guides to loans

Find out more about loans with our in-depth guides
Understanding what affects a lender's decision can help you find the right loan.
What is the easiest personal loan to get approved for?
A couple looking at their loan balance
How to pay off a loan
A couple talking to a loans adviser
What type of loan is right for you?

About the author

Salman Haqqi
Salman Haqqi spent over a decade as a journalist reporting in several countries around the world. Now as a personal finance expert, he helps people make informed financial decisions.

Customer Reviews

Rated 4 out of 5
by 1,064 people