How To Choose A Secured Loan

If you have looked at all the loan options available to you and decided that a secured loan is the one most suitable, how do you go about choosing the right one?

Well - with so many variations on offer the first thing you should do is decide on your options. Even before going to discuss getting your loan it's worth being sure in your own mind about what you want. Here's a checklist to help:

How much do you want to borrow?
How long do you want to take repaying the loan?
How much can you afford in Monthly payments?
Do you want a fixed rate loan?
Do you want a variable rate loan?

If you can answer these questions then you can set about finding the loan that suits your specific requirements.

Lenders offering secured loans, or home owner loans, as they are also called, use the equity in your property as security against the loan, so the current value of your house and your outstanding mortgage will be taken into consideration when assessing your suitability for a loan.

When applying for a secured loan one thing that will be taken into consideration is your credit rating. Lenders will make a decision on the basis of information supplied by the country's two leading credit reference agencies - Experian and Equifax. These two companies compile information about individuals from various sources. This information is sent to the lender and he will make a decision whether or not you are credit worthy.

If you are refused a loan because of a poor credit record, or you are unsure what your credit rating is, you can, for a small fee write to these companies to obtain your rating.

If your credit rating is good then where do you go to get your loan?

Your local high Street bank is one option. You may have an account there and feel comfortable dealing with them. Most banks advertise secured loans at various interest rates and there may be a couple of different options available to you at your bank. The downside is you'll be limited in the selection you can choose from, as they can offer their own limited range of products.

High Street banks also prefer to lend to those with an excellent credit rating, so although they offer some of the most competitive rates in the market, generally only those with a good credit history are eligible for these loans.

You can go to a licenced credit broker broker who can also help you find a loan. Brokers are not linked to any bank or lender, and therefore they can shop around various lenders for you, to come up with a loan that is specific to your needs. For those with some credit problems, this is often the only way of arranging a loan.