This article attempts to provide in easy to understand terms the decision facing you when getting a secured loan in the UK.

Why a secured loan?

Purposes for the loan vary greatly - you may be looking to consolidate all your debts into one easy monthly payment or may be looking to purchase a new car or holiday. Secured loans offer the opportunity to borrow money despite your previous debt history. You may have CCJs or just a bad credit rating due to problems in the past. Well, secured loans offer you a second chance to borrow so long as you have a property that can be the security. Based on the value of your home, you can use this as equity for a loan.

Interest rates

One of the key factors in choosing a secured loan is what the interest rates will be during the term of your loan and whether they will be the same throughout. The given rate across the year is described as the APR. This percentage also takes into account any of the loan providers fees for providing the loan. Now an APR rate can be variable or fixed. Fixed APR means that you will be paying a static interest rate chosen at the beginning of the term, for the duration of the entire loan. It will not change. This can be useful, in that you know exactly what your outgoings will be and can adequately plan them into your finances. However, a variable rate which fluctuates up and down can be beneficial too. As, although it could go up, it could equally go below that of the fixed rate that was given at the beginning of the term. So take your time and really think about whether you want a fixed rate or variable rate on your secured loan.

Which provider?

There are many providers out there thesedays, from banks to independent loan companies. One thing to note is that all companies offering you loans directly will be independently monitored by the FSA (Financial Services Authority). They check to make sure companies behave themselves in relation to money lending. Always compare what loans are out there before jumping into the first contract you find. Bank loans can sometimes be the more expensive option, despite their convenience if you already have an account with them. So always do your research. You can compare secured loans at My Loan Quote UK, and get comparison tables on some of the top lenders available.

Caution is needed

Because any secured loan is secured by the equity in your home, you must be prepared for the possibility that if you default on any of your repayments, you could lose your home. Of course, this doesn't need to be the case, however, you must be more careful than you would be when taking out an unsecured loan for this reason.

Article written by T. wedgwood, the founder of My Loan Quote UK - a useful site to find cheap secured and unsecured loans in the UK.