Why are secured loans cheaper than unsecured loans?

The reason a secured loan can be cheaper than an unsecured loan is because lenders run very little risk of not getting their money back. This is because the loan is secured against a major asset, usually your home or property. That's why they are cheaper than unsecured loans but if you miss payments, there is a risk of losing your home.

Secured loans are preferable when the requirement is to borrow a large sum of money (£5,000 upwards) over a longer period of time, say upto 25 years or so. These kinds of loans are suitable when you are trying to raise a large amount and are having difficulty getting an unsecured loan or, have a poor credit history.