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Zopa’s Jargon Buster – Secured and Unsecured Loans

This week we’re looking at the difference between secured and unsecured loans, as well as the advantages and disadvantages. A secured loan is most commonly a loan whereby a borrower’s property is used as collateral against the loan. This means, as a worst case scenario, if a borrower defaults on the loan, their home can be taken away from them. However, because of this security, the APR on secured loans is often lower, and amounts lent can be large. Secured loans are not always secured against a home, although this is most common. They can also be secured against a car, or even other valuable assets at places such as Borro.

An unsecured loan is not secured against any collateral. The amounts lent are usually smaller, and generally have a higher APR because of the riskier nature of the loan. For this reason, it can be more difficult to get an unsecured loan with a low APR if you have a less than perfect credit history.

Here at Zopa, our loans are unsecured. We only lend to prime borrowers, and because of this, our lenders make sure Zopa’s rates are some of the most competitive in the market. You can check out the latest rates here.