Secured loans, a beginner's guide

Type 'secured loan' into Google and you will get a barrage of secured loan information - it can all seem a bit confusing, even to the savviest amongst us.

Borrowing money is a big decision, but educating yourself on secured loans can help you avoid the common pitfalls.

The easiest way to get your head around secured loans is to answer some common questions.

Who is eligible for a secured loan?

If you're a homeowner, there's a very good chance you'll be eligible for a secured loan. This is the case even if you're self employed, have a poor credit history or if you're retired.

You can even get a secured loan if you've been declined for credit by your bank or other lenders.

What are the risks with secured loans?

A secured loan is just that - secured. Your home is at risk if you don't keep up repayments.

To avoid this, the important thing to remember is not to overburden yourself. Don't borrow too much, and remember to arrange monthly repayments you can easily afford.

Are secured loans better than credit cards and bank loans?

This depends on your situation. Credit cards are great for small purchases, or for unexpected bills. Bank loans can be good if you need the money straight away, or if you need a smaller amount.

But credit card repayments can quickly add up, and many bank loans require large monthly repayments.

A secured loan can be used to clear your credit cards and bank loans. Plus you can normally get a better rate with a secured loan than with credit or store cards. And you can arrange repayments that are easy to keep on top of.

How much can I borrow with a secured loan?

With a secured loan you can usually borrow anything between £5,000 and £100,000 based on factors such as your home's value and your ability to repay the secured loan.

Credible secured loan companies will not lend you more than you can afford.

This means that, once you receive your secured loan cheque, you can pay off all your other credit and have just one lower monthly repayment to keep track of. The repayment term will also help determine what you pay out each month on your secured loan.

To sum up, the three most important things to remember are:

• Secured loans are secured against your home
• Secured loans can be used to help you pay out less each month
• Secured loans can be a good option if you are self-employed or have poor credit.

Secured loans don't have to be complicated. And now you should find yourself armed with enough information to find one that's right for you.