Most of the loan products available in the credit market can be availed in both secured and unsecured form. Research shows that with benefits like no collateral against the loan amount; less paperwork and quick service in the absence of lengthy property evaluation procedures; and no immediate risks in the event of repeated defaults or non-repayment of the loan amount – unsecured loans are fast catching up in the UK loan market.



However, with drawbacks like limited amount (normally up to £25,000), high APR (as high as 41%), fixed payback method and non-negotiable loan terms and conditions, unsecured credit may turn out to be costly and rigid. Besides, its credit limitation makes it suitable for only small monetary requirements.

As secured loans can only be obtained by offering an asset (like home) as collateral against the loan amount, the only people eligible for this loan type are homeowners and property owners. Other eligibility criteria’s are UK residency, over 18 years of age, credit record, employment status, DTI ratio and the value of the pledged collateral.

Please note: Though secured loans offer maximum loan benefits, homeowners and property owners must give importance to the feasibility of getting into property related legalities and risking the property for a small amount – because for small and urgent monetary requirements opting for unsecured loans may be more practical.

A collateral guarantees repayment, lenders are able to facilitate the borrowers with cost-effective benefits. Flexibility and quick attention are the most attractive features of secured credit. Other characteristics are high credit limit (normally up to £250,000), low APR (as low as 6.7%), multiple rate plans, different repayment methods and negotiable loan terms and conditions.

However, secured loans too have certain limitations – collateral compulsion leading to clientele limitation, slow approval procedure and repossession threat. Hence, availing credit assistance on the basis of requirement and overall feasibility is recommended.