Secured loans are loans that are secured against an asset that you own.
The most common type of secured loan in the UK is a mortgage, through which you take out a loan that is backed by your house. If you fail to make repayments on your secured loan, your asset will be used as collateral - simply put, if you default on your mortgage payments, your home will be repossessed.
Is a secured loan right for me?
Despite their risks, secured loans are a popular option for many people looking for extra funds or a debt consolidation loan. For example, if you have a poor credit rating, you're more likely to be offered a secured loan than an unsecured loan as it presents a less risky option to your lender.
What's more, if you want to borrow a large sum of money and repay over a longer period of time, secured loans could be the right choice for you as they often allow people to borrow heftier amounts.
However, it's important to remember that making repayments on time is essential when you take out a secured loan, as your home - or any other asset against which your loan is secured - will be at risk if you default.
In addition, if you're attracted to a secured loan because of the longer repayment option, remember that this means you'll accrue more in interest than if you had a shorter repayment plan.
For information on alternatives to secured loans, find out more about unsecured loans or remortgaging.
Getting more information on secured loans
Clicking here will take you to the FSA's Money Made Clear website. This will help you to find the right advice in obtaining a secured loan - so before you decide which secured loan is right for you, you'll have all the information you need at your disposal.