Personal Loans - Secured and Unsecured Loans

There are personal loans available these days for all sorts of purposes, and these loans are all either secured or unsecured. There are many people that will be eligible for either a secured or unsecured loan, but there are many others that will only be eligible for one or the other – and some that may be eligible for neither. It is important to learn about secured and unsecured loans if you are considering take out a loan, as this will help you to determine which type of loan you are eligible for, and which type of loan will best suit your needs and circumstances.

There are some lenders that specialise in just one type of personal loan, and others that are able to offer both secured and unsecured loans. The interest rates, terms and conditions, and other areas relating to these loans can vary from lender to lender, and based on the type of loan you take, so it is important to do your research and compare a number of loans from a variety of lenders in order to get the best deal on your borrowing.

Secured loans are loans that are secured against the home, and these are only available to homeowners. Often lenders will consider those with bad credit for these loans because of their secured nature, although the interest rate charged will reflect the bad credit rating. You can take out a secured loan for many purposes such as home improvements, loan consolidation, paying for a car, etc. Depending on the equity levels in your home, as well as on other factors, you will find that the borrowing power with secured loans is far greater than with unsecured. Longer repayment terms are also offered, which means that you can keep your monthly repayments down. However, there are some risks involved. If you default on your loan you could be putting your home at risk because the loan is secured against it. Also, you could find yourself fin negative equity if you mortgage your home to the hilt and then house prices come down.

Unsecured loans are available to both non-homeowners and homeowners, but you will usually need to have good credit to be eligible. Eligibility requirements can differ from lender to lender, and the amount that you can borrow will depend on factors such as you income, outgoings, financial and employment status, credit, etc. The maximum amount that can be borrowed subject to status is usually £25,000 and repayment periods are generally fair short, often between one and five years. There is no risk to your home, as the loan is not secured against any asset, but the shorter repayment period can mean higher monthly repayments. You can use these loans for a range of purposes, such as paying for a holiday, buying a car, paying for a wedding, consolidating more expensive debts, and more.

Remember that with both secured and unsecured loans you want to get the best deal possible based on your circumstances, and the cost of borrowing car vary widely from one lender to another. You should therefore make sure that you compare loans and lenders and get a range of quotes before you make your decision.