Poor Credit Secured Loans

Poor credit secured loans should be seen as one of a number of options when you are looking to access credit. As a poor credit secured loan involves putting your property or another valuable asset up as security, it is so important to ensure that if you take this route you are able to make the monthly repayments. Otherwise there is a very real risk that you could lose your property. The combination of this risk and the fact that poor credit loans often come with a high interest rate means that careful consideration is needed before proceeding.

The number of options you have depends on what you need the poor credit secured loan for. If you need a loan to consolidate existing debts, the minimum requirement for taking out a poor credit secured loan is that it substantially lowers your monthly repayments and is more financially viable than your existing arrangements. Make a list of your creditors and the total amounts that you owe. It may be possible to pay off a smaller number of debts, specifically those with tight deadlines and the highest interest rates, with the loan and making repayment arrangements with the remaining creditors. This way you would avoid being tied into poor credit secured loans, and could instead take out a smaller, unsecured loan. If you are trying to raise money for a wedding, holiday or house repairs, consider remortgaging to make use of the equity in your property. Obviously the risks of repossession remain the same, but the repayment costs are generally lower than they are for poor credit secured loans.

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Alternatives to Poor Credit Secured Loans

• Although a debt consolidation loan can be a great relief in the short-term, taking out a poor credit secured loan to pay off existing debt may make the situation worse.  If you owe at least £2k and have 2 or more creditors, you may wish to consider a debt management plan instead of going down the poor credit secured loans route.  This would involve paying a debt specialist to create a repayment plan by liaising with your creditors on your behalf.  The alternatives would be to use a free organisation, or to manage your creditors personally.  As this is a step before a legally binding IVA (individual voluntary agreement) or bankruptcy, there is less stigma attached, and you would have less trouble obtaining credit in the future.
• Prioritising your debt can make a huge difference to the amount that you need.  Lenders will often encourage consumers to take poor credit secured loans for more than they actually need, giving the incentive of a cash lump sum that you can spend as you choose.  If you can be totally honest with yourself about the amount of money you require immediately, you may be able to scale down from looking at poor credit secured loans to the more manageable unsecured loans, thus saving yourself money and keeping your debt at a lower level of risk.