Secured loans

A secured loan uses a valuable possession as collateral.

This means the lender can take that possession or force you to sell it if you can’t repay the loan.

Most secured loans are tied to your home, but you can also use other valuables like cars or jewellery as collateral.

Mortgages are one of the most common types of secured loan.

If you’re struggling to repay a secured loan, contact your lender. Ideally, you should do this before you miss any payments.

Lenders have a responsibility to help if you’re facing financial hardship.

There are various ways they may be able to make life easier for you, such as:

• extending the term of your loan to reduce the monthly payments
• temporarily switching you to interest-only payments
• offering a payment holiday

Bear in mind that taking longer to pay off your loan may mean you’ll pay more interest overall.

If you’ve already missed a payment, it’s important to get back on track as quickly as possible, or you risk losing the possession used as collateral.

Speak to your lender about setting up a repayment plan for the arrears.

If you can’t afford to repay the arrears, get debt advice as soon as possible.

Keep your lender informed about your situation and let them know you’re getting help. If they’re aware you’re trying to deal with your money worries, they may delay further action.

Find out more about what happens when you miss payments.

A lender is unlikely to write off your secured loan, as it’s tied to the item used as collateral.  This means they can get their money back by selling that item.

Secured loans can’t be included in debt solutions either.

If you’re dealing with a serious health condition, it may be possible to get a secured loan written off. Find out more about medical write off.

Or your lender may agree to an indefinite hold. This means they’ll stop chasing you for payment, but the amount owed will remain an outstanding debt. 

You should only take out a secured loan if you can comfortably afford the repayments. Use our budget planner to work out what’s affordable.

If you’re already struggling and are considering a secured loan as a way to improve your situation, get debt advice first. Borrowing more may not be the best way to deal with your problem.

We can check you’re not missing out on any financial support you’re entitled to and look at whether a debt solution may be appropriate.