If you're considering borrowing money, understanding the difference between secured and unsecured loans can help you understand how each option works.

This guide explains some of the key differences between secured and unsecured borrowing.

What is a secured loan?

A secured loan is a type of borrowing such as a mortgage, a second charge or a hire purchase agreement, which is secured against an asset such as your home or vehicle. Because of this security, lenders can sometimes offer much lower rates as the level of risk is reduced. If repayments are not maintained, the asset used as security may be at risk.

What is an unsecured loan?

An unsecured loan is a type of borrowing which doesn’t use an asset as security. As the lender does not hold an asset as security, unsecured loans can sometimes have a higher interest rate than secured borrowing. This reflects the increased level of risk to the lender.

Key differences between secured and unsecured loans

Does Norwich Trust offer secured loans or unsecured loans? 

Norwich Trust is a direct lender offering unsecured personal loans for homeowners across the UK, meaning that whilst the loan isn’t attached to your property, you must be the legal homeowner of a property in the UK to be eligible. Our unsecured loans are available to UK homeowners and can be repaid over terms of 3 to 10 years.

Looking for an unsecured personal loan? Check your eligibility with Norwich Trust today and find out whether we could help.

This information is provided for general information purposes only and does not constitute debt or financial advice. Customers should seek independent debt advice if they require personalised guidance