Best Loan rates

People often wonder why secured loan options offer cheaper Annual Percentage Rates (APR) than unsecured loans. The simple explanation is that the secured loan is secured against an asset of the borrower's. This is usually their house. Unlike an unsecured loan where the loan finance lender has no such guarantee that the money will be repaid (apart from going by a borrower's credit history), they know that by securing the loan against a valuable asset, the money is virtually guaranteed to be repaid and if the lender fails to pay, there is a valuable asset from which to recover it from.

Therefore, because there is less risk to the lender, they can offer lower interest rates. Secured loans are also easier to obtain because the asset is the determining factor and not a person's past credit history.

Another benefit to the secured loan option is that you can usually borrow a far higher sum than by going the unsecured route and can pay back the loan over a longer period of time. It's usually up to 25 years with a secured loan and up to 5 years on an unsecured loan. As well as being used for a variety of reasons, such as major home improvements, the fact that repayments can be spread out for as long as 25 years in most instances means that it is possible to consolidate any other borrowing and reduce the monthly outgoings to such an extent that considerable extra income is made available to the household budget.

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