When considering taking out a loan, a secured loan is one of the best for lower interest and flexibility available. Secured loans are secured against properties, thus reducing the lenders risk if borrowers default on repayments. By taking out a secured loan borrowers are demonstrating to the lender that they are committed to repaying the secured loan, as lenders are in legal possession of properties for the duration of the secured loan and have the right to repossess if non-payment of a secured loan occurs.

There are many advantages of taking on a secured loan. For example, interest rates on secured loans are usually much lower in comparison to unsecured loans; repayments on secured loans can be spread over longer periods thereby reducing the monthly outlay; secured loans are very flexible in that they can be used for almost any purpose from home extensions to a car or holiday; and larger loan amounts can be taken out than for unsecured loans.

In the UK , secured loans have a very diverse and competitive market. Interest rates and terms and conditions vary considerably from lender to lender, so it's worth shopping around for the right deals before applying for a secured loan.

The interest charged on loans is known as APR (Annual Percentage Rate). Many borrowers question the differences between rates advertised and the actual rates they have to pay. When it comes to secured loans, there may be several reasons for these differences. Rates will vary depending on the personal details of the borrower (such as credit history), the value of collateral, the loan amount, the loan term, etc. After mortgages, secured loans charge the lowest rate of interest in the personal finance category – typical APR on a secured loan ranges from 6 to 25 percent. Almost all other financial products charge a greater percentage of interest. The differences in interest rates may also result because of the delay in accepting the offer. Until a borrower accepts the offer of a loan, the interest rates in the entire market may change. The borrower cannot then demand interest at the rate previously offered. If you have sufficient collateral and are in a good financial situation, it is likely that you will get the best interest rates and a more relaxed repayment option.

Secured loans are available to people with a good credit rating or a bad credit rating. While those with a good credit rating are usually offered more competitive rates, if you have a bad credit rating the interest rate you are given will often be significantly higher. However, there are many lenders in the financial market who are prepared to offer lower rates, so be sure to compare quotes in order to get the best deal.

The process of getting a good rate for a secured loan should start with looking for an offer you are happy with. They can come from newspapers, websites, media, or any source for that matter. If you have taken a loan beforehand and have had a positive experience from the lender, by all means go back to them and present your case. Ask them for a quote; since you are a repeat customer, there is a good chance that the lender will want to keep you as a customer and will therefore offer a lower rate. Check your local bank and financial institutions. Visit or contact as many lenders as possible. Get a quote from all off them. Ask them about their terms and conditions, the time taken to get a loan, and the overhead costs for the loan. Keep a record of these facts so you can easily compare them later.

Consider using an online lender as they will often offer you the best rate on a secured loan. This is because online lenders have lower overhead costs than the high street lenders, and are therefore able to pass those savings on to the customer.

While shopping around for low rates on a secured loan, be sure to present the same collateral to each of them when making an enquiry. Don't alter the description of your credit history or financial circumstances. Be sure the quotes you get from different lenders are being judge by the same criteria.

Once you have all the details from the various lenders, opt for the one that is giving the most competitive APR, simple repayment schedules and minimal fees. Avoid variable rate APR. Lenders can alter rates with these so that a loan looks very attractive at the start but gradually inflates within a few months. Remember, the savings made or lost depending on the lender you choose can be significant.

Finally, you should consider taking out payment protection insurance which will cover your repayments on the secured loan in the event of death, accident, sickness or involuntary job loss occurring. However, the disadvantage of payment protection insurance is that it is added to the secured loan amount and interest is charged on the entire secured loan.