A bad credit secured loan can do more for you than simply give you needed cash. Bad credit secured loans are often a great opportunity for someone to mend their credit status. For this reason, many financial advisors recommend that those with bad credit take out a loan and pay it off in a timely manner to quickly help repair their damaged credit.

Because interest rates for mortgages and home loans are at an all time low in the United Kingdom, lenders are competing heavily to attract new customers. For this reason, many of them are able to loan money to individuals who may not have qualified for loans years ago, this includes those who are unable to verify income, those with County Court judgements against their name and those with poor or bad credit. Many people with bad credit, eager to restore their good credit rating, are taking out secured loans and paying them back to raise their credit rating.

A secured loan requires some form of collateral; either a home, bank account, stock certificates or even valuable collections. Those who own a home can borrow against the equity. Equity in a home is determined by the amount of money the home is worth less the any amount owed towards a mortgage. Because home prices in many areas have risen substantially over the past several years, many people have quite a bit of equity in their home that can be borrowed in the form of cash at a much lower rate than one receives for a bank card loan.

Bank card loans are unsecured loans and generally have a high interest rate. Many people use these cards to make large purchases and end up carrying a balance on the card. If they have more than one card, they may end up using them to purchase many different things and incur quite a bit of debt. If a person meets with dire circumstances, such as losing a job, they may get behind the payment schedule when paying off their bank card balances, causing their credit rating to suffer. Even if they manage to make the minimum monthly payments, they sometimes find that they can see no end to their debt in sight.

There are many reasons to borrow money. One very good one is to pay off balances on bank cards that have high interest rates. By applying for a bad credit secured loan, one can get a loan for a much lower interest rate than their current bank card rate, pay off the bank card balances and consolidate their debt into one convenient, low monthly payment. Because the interest rates on secured loans is so much lower than bank card loans, individuals who wisely choose to consolidate their debt through a bad credit secured loan find that they pay less each month for the one payment than they did for all the other payments combined and that they can look forward to a time in the near future when they will be debt free.