Secured Loans Explained

A secured loan is a loan which is secured against the value of an asset such as a vehicle or house. In the guide below we explain what is meant by the term secured loan, and what it means when associated with car finance.

Creditplus Definition of Secured Loans

A secured loan is always secured against an asset, meaning that if the customer fails to make their monthly repayments the lending company are able to repossess the asset in order to cover their costs. In theory, the asset can be anything of worth, such as a house, vehicle or even jewellery. In most cases the loan is secured against the item which is being financed

Secured loans present a much lower risk than an unsecured loan because the lender knows they will be able to recover the asset to pay for the sum if the customer fails to make their monthly payments. Another advantage of secured loans is that they are available to a much wider range of customers than an unsecured loan, meaning that even those with a bad credit rating may be able to find finance. Unsecured loans are usually available to a much more selective group of customers, usually with excellent credit and a good income.

What can I do to protect my asset?

Our first advice for anyone who feels they may struggle to fulfill their monthly payments is to contact the lender. It is better to confront the potential issue head on before you fall behind too far. Get in touch with either your Customer Advisor here at Creditplus or the contact details you have been provided with for the lender who provided the loan. Explain to them clearly the situation and try to work towards a resolution. This could be a revised payment plan or payment holiday. Each lender is different and will treat the situation based on your personal circumstances. Speak to them first and you may be able to avoid repossession.

Wikipedia Definition of Secured Loans

"A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes secured debt owed to the creditor who gives the loan. The debt is thus secured against the collateral in the event that the borrower, the creditor takes possession of the asset used as collateral and may sell it to regain some or all of the amount originally loaned to the borrower, for example, of a home."

Source: Secured Loans at

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