Poor Credit Secured Loan

You will often find when you are shopping around for poor credit loans that you are required to secure the loan against your property or another valuable asset. This is due to the fact that you represent a more risky proposition to a loan provide when you have a poor credit rating, and they are therefore guarding against the possibility of you defaulting on your loan repayments. The alternative to guaranteeing a poor credit secured loan against your property is to borrow a smaller amount. If you see no alternative to taking out a secured loan among the borrowing options that are available to you, it may be worth taking out a loan payment insurance policy to safeguard your poor credit secured loan payments should you unexpectedly lose your income.

If you are taking out a poor credit secured loan against a property that has already been mortgaged, this is known as a second charge loan. Taking out a poor credit secured loan when there is no mortgage on the property is known as a first charge loan. Second charge loans, especially poor credit secured loans, have traditionally been seen as a last resort for borrowers, due to the strict repayment criteria and substantial risk involved with this type of borrowing. We would highly recommend speaking to a qualified financial advisor before proceeding with a poor credit secured loan, to ensure that there are no alternatives to securing your loan against your property.

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Poor Credit Secured Loans: The Facts

• Poor credit secured loans are typically taken out by borrowers who have had debt problems in the past, and who are looking to borrow a large amount of money.  
• Another reason for only being eligible for poor credit secured loans is having no credit history.  Strange as it may seem, if you have never borrowed money before, your credit rating will be bad.  The reason for this is that lenders have no idea about whether you will borrow responsibly and pay them back, and so they need to have a property secured against the loan as collateral. 
• Although the industry has been ‘cleaned up’ of late, you should be careful when looking into poor credit secured loans not to borrow above your means (scrupulous lenders would not let you do this), because the financial penalties are far more severe for this type of borrowing and you may lose your house if you do not keep up repayments.