Is it easier to get a secured or unsecured loan?

If you're a homeowner, you may find it easier to get a secured loan compared to an unsecured loan because your home acts as collateral. If you don’t have any equity, then you consider an unsecured loan instead, which doesn’t require you to have any assets.

5 min read
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Is it easier to get a secured loan with bad credit? 

It can be easier for homeowners with bad credit to get a secured loan (compared to an unsecured loan) because an asset is used as security.

Since the lender could sell your home to claim back funds (in the worst-case scenario), they tend to rely less on your credit score when considering your application. This means your chances of approval may be higher, even if you have bad credit.

Remember though, you should only get a secured loan if you are sure you can afford the repayments– otherwise, you risk losing your home.

Why is a secured loan easier to obtain? 

Secured loans tend to be easier to obtain (for homeowners) than an unsecured loan, as the loan is tied to your home, which acts as a safety net for the lender.

If you don’t own your own home or have a mortgage, you won’t be eligible for a secured loan. But there are alternatives you could consider, such as:

What credit score is needed for a secured loan? 

Lenders still take your credit history into account when deciding whether to offer you a secured loan. There isn’t a specific credit score you need in order to get approved, because all lenders have different criteria and measure your credit score in various ways.

Generally speaking, the higher your credit score is the more likely it is you’ll get offered a secured loan. You should also be eligible for lower interest rates.

It’s a good idea to keep an eye on your credit history if you think you want to apply for a secured loan. Doing this will allow you to work on improving your credit score, allowing you to access better deals. You can check your credit score for free, (for life) with CredAbility.

How long does it take to get a secured loan? 

Each lender follows its own application process. But generally speaking, it can take around three to six weeks to get approved for a secured loan and have the money in your account. This is longer than an unsecured loan because there are more steps involved in the application process – due to using an asset as security.  

If you’re worried about the amount of time it will take for you to get the money for an unsecured loan, speak to the lender you want to apply with. They should be able to give you a rough idea of how long it will take.

You can also make sure you have all the information they need to hand, including personal details, address history and financial history. This will make the application process go more smoothly and hopefully allow you to access the cash quicker.

Is a secured loan right for me? 

It’s not just about which is the easiest or quickest loan to get – you also need to consider which one is the most suitable for you. A secured loan is a big commitment due to the large amount of money and long repayment time involved.

Think about the following ten factors carefully before making a decision:

  1. Eligibility – use an eligibility checker to see if you’re eligible for the loan before you apply, without impacting your credit score
  2. Risk – if you stop making the repayments, you risk losing your home
  3. Affordability – you need to be able to afford the repayments even if something happens and you suddenly have less money
  4. How much you need to borrow for – secured loans are generally only used to borrow a large amount of money (between around £10,000 and £100,000)
  5. How long you want to borrow for – you’ll have a longer loan term (compared to an unsecured loan), so decide if you’re willing to commit to repaying a secured loan for several years
  6. Interest rates – the interest rates are generally lower on a secured loan than an unsecured loan, as there is less risk involved for the lender
  7. Fees – some providers may apply early repayment charges for example
  8. How soon you need the money – it can take longer to get a secured loan, compared to an unsecured loan
  9. Whether another option may be better – weigh up the pros and cons against taking out a credit card, getting a loan from family and friends or joining a credit union
  10. The total cost of the loan – while interest rates on a secured loan tend to be lower than on an unsecured loan, a longer loan term could mean you end up paying more in total

Secured Loans from £10,000 to £100,000

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We have found loans with rates from 2.3% to 27% which has allowed us to help customers with a range of credit profiles. Representative Expample: If you borrow £19,400 over 7 years, initially on a fixed rate for 5 years at 4.55% and for the remaining 2 years on the lender's standard variable rate of 5.50%, you would make 60 monthly payments of £313.60 and 24 monthly payments of £316.65. The total amount of credit is £22,523; the total repayable would be £26,415.60 (this includes a Lender fee of £795 and a Broker fee of £2,328). The overall cost for comparison is 9.6% APRC representative. This means 51% or more of customers receive this rate or better.