Unless you have applied for a loan before, some of the termin0logy used by companies could be new to you. In particular you may not have heard of the term "secured loan". Here we explain what they are and why you may be interested in applying for one.

A secured loan is a particular type of loan where the amount of the loan is secured against an asset own by the borrower for the purpose of giving the lender some security against recovering their money should the borrower default on their repayments at some point during the term of the loan.

Not all loans are secured - an unsecured loan does not require the same type of security or collateral to be in place. A secured loan is normally considered by a borrower when either an unsecured loan would not be available to them or the interest rate charged on an unsecured would be higher than the secured equivalent. For these reasons you would normally be looking at secured loans for a variety of different reasons. For example if you need to borrow a large amount of money over a longer period of time or if your credit rating is such that a lender would not offer an unsecured loan to you.

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