Secured Loan Rates

Secured loan rates will depend on a variety of factors. If you are taking out a loan that is secured against a property on which you already have a mortgage, this is known as a second charge loan, and will incur much greater interest rates than a 'first charge' secured loan, where there is no mortgage to consider. Second charge secured loan rates are often so high that they should only be considered if there are no alternatives, because you are putting your property at risk if you become unable to meet the repayments.

If you are likely to be able to pay back your secured loan early, you should steer clear of loans with early repayment charges, because these will increase your secured loan rates of interest. A responsible lender should encourage you to repay the loan early if you have the ability to do so. If you do get tempted by the secured loan rates where early repayment fees are charged, the alternative would be to put the surplus funds into a high-interest savings account for the term of the secured loan, so that the extra interest you are paying is counterbalanced by the interest you're earning.

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Getting the Best Secured Loan Rates

• When comparing secured loan rates, use the APR (or annual percentage rate of change) as the comparison metric, because this takes into consideration all additional fees and charges you will encounter over the term of the loan.  Otherwise you may get tempted by secured loan rates with a lower rate of interest, but a higher arrangement fee and severe penalties for early repayment.
• Check your credit rating before making your application.  Apply to a credit reference agency such as Experian, Equifax or Callcredit for your file before making any applications.  Occasionally mistakes appear in your form that would affect your credit rating and therefore the secured loan rates that you are offered.  You have the right to ask for these mistakes to be corrected if they appear.