Adverse secured loans are loans made available at higher interest rates to people who have a less than perfect credit history for providing collateral against the loan advanced. These borrowers do not qualify for the best market interest rates because of a deficiency in their credit history. An adverse credit history usually means that the borrower has a history of County Court Judgments, defaults, missed payments on a mortgage or secured loan arrears or non-payment /arrears related to some unsecured credit.

Lenders give out adverse secured loans at premium rates i.e. at much higher interest rates to compensate for being exposed to a greater risk by lending to a borrower with adverse credit history as compared to the risk in a loan given to a borrower with a good credit history. Adverse credit is also known by other terms like bad credit, poor credit or sub-prime. Sub-prime refers not to the interest rate charged on the loan but to the credit status of the borrower.

Sub-prime lending is called predatory lending as lenders disburse these loans fully understanding that such borrowers may not be able to meet their repayment obligations and would default on the loan. They realize that this will give them an opportunity to foreclose and seize the collateral. Lenders usually required a borrower to pledge his/her home as collateral against an adverse credit secured loan. Sub-prime lending forms a sizeable portion of the UK secured loans market. For families with poor credit histories, adverse secured loans are regarded as a real boon by many experts. Applied incorrectly, they can be an expensive burden and can create false hope for people who have very little to start with.

There are no fixed criteria for the approval of an adverse credit loan as different lenders take a different view of the reasons for the bad credit of the borrower. If a CCJ's are not recent and hve exceeded a particular age then many lenders will ignore them. Some ignore payment defaults altogether. One major factor affecting the approval of an adverse secured loan is the way in which a secured loan account (if the borrower has one currently) has been handled over a particular period. The actual rate at which the loan is offered is directly influenced by this particular factor since, assuming the loan is approved, it affects the level of risk concerning the loan repayment.

It is sometimes difficult for a borrower who needs an adverse secured loan to find one which best fits their specific requirements as there are so many different factors which affect the adverse secured loan.

Sometimes, it would be preferable to use the services of a quality secured loan packager. They are aware of the approval criteria for a variety of lenders and can save a borrower a lot of time and hassles.