A Secured loan is a loan that is secured against collateral such as your home or car. Loans of this type have the lowest interest rates on the market because your collateral is forfeit if you do not keep up the repayments - so there is minimal risk to the lender. The distinct advantage of secured loans is the fact you can borrow large sums of money and spread the repayments over many years.

A good credit rating will hold a lot of weight with lenders as it shows that you are punctual in paying your bills, suggesting there is a very good chance of the secured loan being repaid in full and on time. If you have a very good credit rating, lenders will offer you much better rates of interest as you are considered to be the lowest risk in terms of defaulting on payments.

It is important to be aware of how your credit score can affect the type of car you drive and even where you live. If you have declared yourself bankrupt, have CCJs or have missed repayments on a regular basis then it is likely that your credit score will be very low which will have a negative impact when applying for a mortgage, buying a car and even less expensive purchases such as a TV. The main reason for this is that people with a poor credit score pose the highest risk of defaulting on repayments and as a consequence, hold little or no weight with lenders.

Secured loans are ideal for people who are responsible with their money and have good collateral.