Borrowing guide - security & collateral

An UK Loan is secured if you agree to give the bank the right to take possession (or repossess) a specified item, in the event of you defaulting on the UK loan agreement.

Normally, the security will be the item you purchased using the loan. Common examples include cars bought using hire purchase, and houses using a mortgage.

Banks will accept non related items as security for loans. If you own your house, the bank would accept it as security for a business loan, for example.As a general rule, secured loans will be cheaper than unsecured loans.

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