Debt & Borrowing

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If you're struggling with money, or you need to make a big purchase, you've probably considered a loan. Broadly speaking, there are two types of loan: secured and unsecured, and this article will explore the differences.

Secured Loans

These are called secure because you are required to provide a deposit as ‘security' on the loan. In most cases, this security is your property, and this is known as a ‘first charge'. If you already have a mortgage on your home, the loan is called a ‘second charge'.

The amount that you pay in interest on the loan depends on several factors:

  • The sum that you borrow
  • The amount of equity in your property you already own
  • The bank or lender's judgement of your ability to repay the loan (based on your personal circumstances)
  • Your credit report and history

Unsecured Loans

Also known as ‘personal loans', an unsecured loan does not require you to submit any security. Usually, due to the higher risk for the lender, unsecured loans are only available for smaller amounts and the interest rates are much higher. Therefore, it's more an unsecured loan is more expensive to pay back.

The decision as to whether or not an unsecured loan is granted is based on your personal credit history. The lender will check your credit rating, which is based on elements like employment history, repayment of past loans, and other existing debts. You will need a good credit rating to be granted this kind of loan.


Whatever type of loan you end up with, you will need to know how to budget money in order to make sure you can always afford your repayments. Money Dashboard makes this kind of budgeting easy, and will automatically tag repayments from your accounts, so you'll always know what's happening with your money.

Sam Jackson

Money Dashboard

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