2 min read
Compares total cost and monthly payment of two offers side by side.
Why security lowers the rate
A secured facility gives the lender an asset to recover value from on default, cutting its risk and therefore your margin. Lower loan-to-value lowers it further.
How big is the saving?
The gap between secured and unsecured rates for the same borrower can be a few percentage points — real money over a term. On £100,000 over five years, a 3% lower rate saves several thousand pounds in interest.
The risk you take on
Security means an asset — property, equipment, or a debenture over the company — is on the line if you default. Weigh the interest saving against the consequence of losing it, and never pledge more than the loan warrants.
Model both options
Compare the secured and unsecured rates on total cost using the calculator below, then judge whether the saving justifies the security.
Where Credicorp fits
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See indicative terms on business loans, or apply online in minutes.
Credicorp lends unsecured to your company with no personal guarantee. See secured vs unsecured rate.
Frequently asked questions
How much cheaper is a secured loan?
Often a few percentage points, which is significant over a full term. The exact gap depends on the asset, the loan-to-value and your profile.
What can I secure a business loan against?
Commonly property, equipment or a debenture over company assets. What you pledge is at risk if you default, so weigh the saving against the exposure.
Is unsecured borrowing always dearer?
Usually, because the lender has no asset to fall back on. The higher rate is the price of keeping your assets unencumbered.
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Secured vs unsecured rate
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Risk-based pricing
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Why secured finance is cheaper than unsecured
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Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.