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Secured loans for bad credit

Secured loans for bad credit could help homeowners will a spotty credit history unlock better rates and arrange longer loan terms. Compare the loan deals shown below to see if they're right for you.

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Compare secured loans for bad credit from top providers

Our data experts check each company before adding them to our comparisons, so you only see results from genuine firms.

Equifinance
Clearly Loans
Norton Finance
United Trust Bank

How to get secured loans for bad credit

1

Calculate how much you need

Work out how much you need to borrow and how long you will need to repay the loan. Rates vary widely across providers, so comparing offers improves your chances of finding the best secured loan for those with bad credit.


2

Check your eligibility

It's important to know which loans you can get. Our comparison will show you secured loans that you're more likely to be accepted for if you have a poor credit history or have missed repayments in the past.

3

Compare loan

Online lenders can often be more forgiving to those struggling because of a bad credit rating. That's why you should always compare loans online to make sure you get the best bad-credit secured loan deal available.

Secured loans for bad credit

Think carefully before securing other debts against your home. You home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

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Overall representative example

Based on borrowing£18,000 over 120 monthsThe overall cost of comparison9.1% APRC representative
Borrowing rate6.5% per annum for the first 60 months, followed by 60 months at the lender’s standard variable borrowing rate of 4.95% above Bank of England Base Rate. There would be 60 monthly instalments of £227.38 followed by 60 instalments of £221.71Broker fee£1,530
Lender fee£495Total amount payable£26,945.40 comprised of a loan amount of £18,000 and interest of £6,920.40

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.

This type of loan is often secured against your property – which is why they're sometimes known as "second charge mortgages" or "homeowner loans" – but they can use any asset of value as security. In some cases, this could include your car. If you are unable to repay the loan, the loan provider has the right to recoup the money you owe by selling whatever you staked as security.

You may still be accepted for a secured loan for bad credit even if you have:

  • Mortgage arrears

  • County Court Judgements (CCJs)

  • Other missed repayments

It’s worth remembering that secured loans for people with bad credit usually come with high interest rates and fees, which means you may be better off opting for a bad-credit credit card or remortgaging your home.

Man using laptop

How to find the right secured loan for bad credit

This will depend on your financial history and personal circumstances.

Before you apply for a secured loan for bad credit, it’s important  to ask yourself some key questions:

  • Does it offer you the amount of money you need?

  • Does it give you enough time to pay back what you owe?

  • Will you be able to pay back what you owe every month?

  • Does it have the lowest interest rate that you can find?


Do you have to use a broker?

Using a broker can be useful, as they can give you an indication of whether your application will be accepted before you apply.

In fact, most lenders no longer offer secured loans directly to borrowers, and only work through brokers.

A good broker will also assess your circumstances before you apply, including any credit problems, and help you find a suitable loan that meets your needs.

What are the pros and cons of taking out a secured loan with bad credit?

Getting a loan can sometimes become necessary, but it isn't something to be taken lightly. This is especially true if you have bad credit. Consider the following pros and cons to help you decide:

  • Quick access to cash: Many lenders will transfer funds in 24 hours.

  • May allow you to borrow more: The loans are secured to your property, so banks may be willing to lend you more than otherwise would.

  • May improve your credit: If you stay on top of repayments, it can help improve your credit record.

  • Lenders are likely to charge you a higher interest rate because of your poor credit history. Thus your loan will cost you more overall.

  • Your loan is secure against your property, so if something goes wrong and you're unable to keep up with repayments, you could lose your home.

How much can you borrow with a secured loan?

The amount you can borrow will depend on your property value, income, and financial circumstances, but secured loans can be for anywhere between £1,000 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's worth working on improving your credit before getting a secured loan with bad credit.

Salman Haqqiquotation mark
The good news is secured loans are more likely to be approved, as you are putting up an asset as collateral. It’s important to remember that this also means you are putting your asset at risk. So make sure that you can afford the monthly repayments.
Salman Haqqi, Personal Finance Editor

Things to know before you apply for a secured loan for bad credit

As mentioned, taking out a bad credit secured loan is a serious commitment, especially considering that you're already financially vulnerable due to your poor credit history.

This is why it's important that you:

  • only borrow as much as you need

  • know how much time you need to pay it back

  • can afford the monthly payments in addition to your regular outgoings

It is also worth checking that your credit record is accurate and up to date before you look at secured loans for poor credit, even if you know you have not had issues in the past.

The main risk of getting a secured loan when you have bad credit is that you could be putting your home at risk if you're unable to keep up with repayments..

Writing a budget can also be a helpful exercise to know exactly how much you can afford to pay towards any new loan. This can reduce the chances of missing any payments in the future.

Secured loans for bad credit FAQs

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How to borrow money with bad credit

You can get a personal loan with bad credit, but the rates will likely be high. It can be harder to get a loan with bad credit, and it may be worth trying to improve your score before you apply for a loan.

More on borrowing with bad credit

How your credit record affects the loan you get

Your credit record has a big impact on the type of loan you can get and how much it will cost. Here is how your credit history affects your loan application and what you can do about it.

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Should you borrow against your home?

Should you borrow against your house? Find out if taking out a secured loan against your home is sensible or something to avoid.

More on borrowing against your home

Should you get an overdraft, credit card or loan?

Choosing the right way to borrow money can make it cheaper and easier to manage. Here is when you should use a credit card, loan or overdraft.

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What happens if you are unable to pay back your loan?

When you miss a payment on your loan, you'll be charged a fee. You may be issued with a County Court Judgement or have to declare yourself bankrupt if you continue to miss payments.

What to expect if you can't payback your loan

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Last updated: 30 July 2022