If you want to borrow money secured against your home to help you buy something, such as furniture, a car or a holiday, there are a number of lenders all willing to lend you the money - it’s never been easier to get a loan. But bear in mind you will have to pay interest on what you borrow which means that you’ll pay back more than you actually borrowed.

Firms lending money to customers must be licensed by the Office of Fair Trading (OFT) under The Consumer Credit Act 1974. The Act requires certain credit and hire agreements to be set out in a particular way and to contain certain information.

When you apply to borrow money for a secured loan, you’ll be asked to complete an application form. Your answers help the lender to predict how big a risk they're taking by lending you money. This is called a credit score – see Credit scoring.

You’ll be charged interest on what you borrow, usually monthly. The interest rate varies depending on the type of loan. You can use the APR (Annual Percentage Rate) to help you shop around for the best deal. APR tells you the cost of the loan taking into account the interest on the loan and other charges. All lenders have to tell you what their APR is. Think about whether you can afford the repayments from your household budget. Don't sign until you've considered all the options.

As well as the APR, you should consider other aspects of the loan before deciding whether a particular loan is right for you, for example: The length of the loan agreement

You may be considering two loans that have the same APR but run for different lengths of time. As the APR is the total charge per year, you will have to pay more on the loan that runs for longer. Similarly, a loan with a lower APR is cheaper overall than a loan with a higher APR on a like-for-like basis.

You should also consider for how long you wish to commit to paying back the secured personal loan – would you feel comfortable having the debt hanging over you for a long period of time?

Can you afford the payments?

The APR gives you information on the cost of a loan, but it doesn't tell you about the payments you must make. With some loans you will have to make payments weekly, monthly or once a year. And some do not require any payment until the end of the loan, when you will be required to pay off the whole loan in one payment.

Think carefully about when you will have to make payments and whether you could afford to do so.

Your payments may vary if the interest rate charged on your loan varies (called a variable interest rate). You should check if the interest rate on your loan varies and whether you can afford the payments if the interest rate rises.

What if things go wrong?

The APR does not include costs that may become payable if things go wrong, such as charges for late or missed payments or for paying off the loan early. You should consider these charges carefully.

Remember the APR works best as a tool for comparing the cost of loans when loans are considered on a like-for-like basis (for example loans that run for the same length of time).

Do you need help?

• to sort out your borrowing and get out of debt; or
• protecting your repayments in case something goes wrong.

If you’re having difficulty keeping up with your payments, don’t ignore it. No matter how bad things may seem, the good news is that you can get free and expert help. If you have more than one loan and you're thinking of consolidating your borrowing – ie negotiating a new loan to repay existing loans, take care. Get expert help from specially trained advisers.

Several organisations can help you find out where you stand and your legal rights, and can arrange the help of a debt adviser to suggest a way forward to your lenders.

Some lenders suggest you buy payment protection insurance (PPI) from them when you start a credit card or loan. PPI helps you keep up your payments on a loan or credit card, in the event you can’t work because of illness or redundancy – but only for a fixed period of time. This means that the insurance company will pay the monthly repayments (or a percentage of them) on your behalf for a set time - usually 12 or 24 months.