Things to consider before you apply for a secured loan
Before you apply for a secured loan, there are some things you’ll need to think about to give your application the best chance of being approved by a lender.
Regular income and outgoings
A lender will need to know whether you can afford the monthly repayments on a loan secured by property. They’ll ask about your income, expenses and debts.
The more equity you hold in your home or other asset, the less risk lenders will face. This could mean lower rates on your repayments.
Your credit history
You don’t need a spotless credit report to get a good rate, but lenders will usually want to see your borrowing history and any CCJs.
The purpose of your loan
Make sure you give a clear reason for your loan application. Some lenders may have a defined list of acceptable or unacceptable purposes.
Secured loan eligibility
Lenders take several factors into account when deciding if you’re a good fit for a loan product, including:
- Your credit score, including your previous credit history
- The amount you want to borrow and the loan term
- How much you can afford to repay per month, based on your total income.
- The equity in your property. Even if you have negative equity, you may still qualify for a secured loan
- The lender’s criteria.
Take a look at our article on loan eligibility for further advice on whether you can apply for a personal secured loan.
Does credit score matter for a secured loan?
Credit history isn’t everything, but it is important. With loans secured on property, your credit score isn’t the only factor considered. Keep in mind that a better credit score might mean a lower interest rate.