Financial jargon can feel really complicated. Secured loans, unsecured loans, APRs, credit scores, it's enough to make anyone scratch their head.

At V12 Personal Finance, we believe finance should be simple, straightforward and easy for you to understand so you can make the best decisions for you. 

We're here to help you understand the difference between secured and unsecured loans. Whether you're planning a home improvement project, buying a new sofa, or covering unexpected costs, understanding your loan options is the first step to making the best decision for you.

What is a secured loan?

A secured loan is a type of borrowing backed by an asset, usually your home This means the lender has a form of security in case you're unable to repay the loan.

Key Features of secured loans:

Typically available for larger loan amounts. Our panel offers up to £500,000
Often available over a longer term, with our panel it's up to 35 years 
May offer lower interest rates
Requires an asset as collateral (e.g. property)

Remember:
•    Can affect your home ownership if repayments are missed
•    Broker and lender fees will be payable upon completion

Secured loans are often used for big-ticket items like major home renovations or large amounts of debt consolidation. It's important to remember though, that if you don't keep up with repayments, your home may be repossessed.

What is an unsecured loan?

An unsecured loan doesn't require any collateral. Lenders assess your creditworthiness based on your income, residence status, age, credit history and financial behaviour.

Key features of unsecured loans:

No collateral required
Faster approval process with money often in your account in less than 2 hours.
Ideal for smaller loan amounts, our panel offers loans from £2,000 to £35,000
Often available over a shorter term, so will be paid off sooner. Our panel offers terms of 12 months to 7 years.
Interest rates may be higher than secured loans

Unsecured loans can be perfect for everyday borrowing and popular for funding holidays, car repairs, big events or unexpected expenses. They're accessible and don't put your assets on the line.

Should you apply for a loan?

Everyone's circumstances are different but understanding personal loans is pivotal before applying for one. 

Taking out a loan means committing to regular repayments over a set period and missing those payments can negatively impact your credit score, result in additional fees, and make future borrowing more difficult. 

It's also worth noting that borrowing more than you can comfortably afford may cause financial strain. 

It's important to carefully consider the type of loan that best suits your needs, as well as the term and amount that are suitable and affordable to you. If you are a homeowner, you can apply for a secured loan and might be asked to put your home up as collateral against the loan.

At V12 Personal Finance, we encourage responsible borrowing and offer tools like our personal loan eligibility checker to help you assess your options safely and confidently with no impact on your credit rating at the eligibility check stage.

It's important to remember that a full credit search will be carried out once you've chosen to apply for a loan with your chosen lender, and Credit Reference Agencies may keep a record of that search.

Are you eligible for a personal loan?

Secured vs unsecured loans explained

Secured loans can offer lower rates but higher risk if you can't keep up repayments.  It is vitally important to consider your ability to repay the loan before making a full application.

You can apply for a secured loan and might be asked to put your home up as collateral against the loan. Therefore, if you fail to keep up with repayments, your home will be at risk of repossession.

Meanwhile, unsecured loans can offer convenience and speed but may come with higher costs.

How V12 Personal Finance can help

At V12 Personal Finance, we specialise in matching you with our panel of lenders and brokers offering simple and transparent secured and unsecured personal loans.

Why choose V12 Personal Finance?

Access our trusted panel of lenders and brokers
Soft credit check: check your eligibility without affecting your score
Fast decisions: get personalised unsecured loan options in around 2 hours
Flexible repayment terms: choose the term and payments that works for you 

We believe borrowing should be empowering, not intimidating. That's why our personal loan eligibility check is built to give you clarity and confidence without the commitment.

Check your personal loan eligibility

FAQs

1. What is the difference between a secured and unsecured loan?

A secured loan requires collateral, usually your home, while an unsecured loan does not. Secured loans often offer lower interest rates and longer terms (the amount of time you borrow over), but come with the risk of losing your asset if repayments are missed. Unsecured loans are quicker to access and ideal for smaller borrowing needs and shorter terms.

2. Are unsecured loans easier to get approved for?

As with secured loans, it depends on your individual circumstances and the lenders criteria. Our eligibility check will indicate your likelihood of being accepted based on your loan offers and the information you have provided. Unsecured loans do typically have a faster approval process as they don't require collateral. Approval depends on factors such as your age, residence status, credit score, income, and financial history.

3. Can I get a loan if I have bad credit?

It may be possible, secured loans are backed by an asset, and this could help homeowners Lenders may be more willing to offer a loan if you provide collateral, and there are lenders who offer loans to people with lower credit scores. Whatever the loan type, you should expect a thorough credit check, and review of your personal finances and circumstances, and where a poor credit history is a factor, higher interest rates or lower loan amounts may be offered

4. What happens if I miss repayments on a loan?

Missing repayments on a secured or unsecured loan can negatively impact your ability to take out future credit and mean you could incur charges. Missing repayments on a secured loan can put your collateral at risk of repossession. It's crucial to borrow responsibly and ensure repayments are affordable.

5. Are unsecured loans safe?

Unsecured loans are safe when borrowed from a reputable lender. They don't put your assets at risk, but missing repayments can still affect your credit score and lead to fees and problems with future borrowing.

6. Are secured loans safe?

Secured loans can be safe when used responsibly and with a clear understanding of the terms. These loans are backed by collateral (usually property) which means lenders may offer lower interest rates and higher borrowing limits. However, because your property is used as collateral, there is a risk of repossession if you fail to keep up with repayments. 

7. What can I use an unsecured loan for?

Unsecured loans are ideal for everyday expenses like holidays, car repairs, significant events or emergency costs. They don't require you to put up any collateral.

8. What can I use a secured loan for?

Secured loans can be used for a wide range of purposes, making them a flexible borrowing option for homeowners. Because the loan is backed by your property, lenders may be willing to offer larger amounts and longer repayment terms. 

Common uses include: 

•    Home improvements - such as extensions, renovations, or energy-efficient upgrades 
•    Education costs - including university tuition or professional training 
•    Major purchases - like buying a car or funding a wedding 
•    Debt consolidation - combining multiple debts into one manageable monthly payment 

9. How do I check if I'm eligible for a personal loan with V12 Personal Finance?

You can use our personal loan eligibility check to see your options with no impact on your credit score*. It's quick, easy, and if eligible, will present offers in minutes.

*A full credit search will be carried out once you've chosen to apply for a loan with your chosen lender, and the Credit Reference Agencies may keep a record of that search.

Credit is subject to status. You must be a UK resident aged 18 and over. Regular income provable. Minimum loan term is 12 months. If you are a homeowner, V12 Personal Finance, which is a trading name of V12 Retail Finance Limited, may provide you with details of loans secured against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. The % APR rate you will be offered is dependent on your personal circumstances. If consolidating existing borrowing, you may extend the term and increase the total amount you repay. Secured Loans will attract a broker fee and a lender fee upon completion of the loan and these may be added to the amount borrowed. Full details will be provided by the credit broker.

V12 Personal Finance is a trading name of V12 Retail Finance Limited. V12 Retail Finance Limited is a credit broker and not a lender. V12 Personal Finance introduces to one or more lenders or credit brokers, for which we will receive a fee or commission payment for each successful paid out loan. The amount of the fee or commission payment will vary depending on the product chosen and the amount of credit taken out.