What makes a loan secure
A secure, or secured, loan is backed by something you own, such as property, a vehicle or savings. If you don't repay, the lender can take the asset to recover the money.
Because the lender has that security, these loans may offer larger amounts or lower rates than unsecured borrowing. The trade-off is that the asset is at risk.
Worked example
Borrowing £30,000 at 8% over 10 years costs £363.98 a month, £43,677.93 in total. Over 5 years the payment is £608.29, but the interest falls from £13,677.93 to £6,497.51.
Interest is worked out monthly at one twelfth of the annual rate. Lenders may calculate interest differently (some charge it daily), so your actual payments can differ slightly.
Choosing a term
A longer term lowers the payment but means paying interest for longer. Over 15 years, the same loan costs £286.70 a month but £21,605.21 in interest. Pick the shortest term you can comfortably afford, and check for early repayment charges.
Inputs for the secure loan calculator
Amount to borrow
The amount you want to borrow.
Interest rate (per year)
The annual interest rate on your loan. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over.
CALCULATOR QUESTIONS
Asset-backed loan calculator questions
What is a secure loan?
A loan backed by an asset you own, which the lender can take if you don't repay.
What can be used as security?
Commonly property, but some lenders accept vehicles, savings or other valuable assets. It depends on the lender.
Is a secure loan cheaper than an unsecured one?
Sometimes the rate is lower, but a longer term can make it cost more overall. Compare the APR and total repayable.
What happens if I can't pay?
The lender can take the asset used as security. Talk to the lender early if you're struggling.