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What kind of personal loan do I need?
The two basic types of loan are "secured loans" and "unsecured loans".
Online Quotes for Personal Loans, Secured or Unsecured. Click above for your Quote
Secured Loans
Secured loans are where the lender has a legal charge on one or more of your assets. For most people, this is normally their house. But to enable the charge to be registered at the land registry, you must be the registered owner of the property. This means that tenants will not qualify for a secured loan unless they own other property. And where then property is registered in more than one name, all owners must agree to the charge being applied.
- Secured Loans In UK Are The Best Option For Borrowers
- A good introduction to the topic of secured loans
- Adverse Credit. When is a credit history described as adverse ?
- When do have an adverse credit rating? The situation is far from clear but this article sheds light.
- Personal Loans – do your research before signing up
- This article discusses the importance of doing your research before signing up for a personal loan.
- Personal Finance. Credit Agencies refused access to information about student loans
- If you apply for any form of personal credit, the lender will inevitably obtain your credit history from one of the big credit agencies. But these credit records do not include information about student loans. This article explains the background and whether the situation is likely to change.
The charge means that if you default on the loan repayments, the lender can apply to the courts to have you removed from the house so that it can be sold. From the proceeds of the sale, the lender is then repaid along with any other charge holders (e.g. your mortgage). If there is any surplus money left having paid those charges, the balance is paid to you. If the sale proceeds do not cover the full repayment of the charges, you still owe the shortfall and the lenders can still pursue you for the balance they are owed.
Because the lender has a high level of security, their lending risk is lower. This means that interest rates on secured loans are lower than those for unsecured loans.
Personal Loans
Personal loans is a term used generally to describe loans that are used to purchase smaller, lower cost items and typically have a ceiling in terms of value. Larger loans used to pay for higher cost items normally adopted the purchase source into their name such as car loans and home improvement loans. Loans described as personal loans are available from multiple sources such as high street banks, building societies, supermarkets and online brokers. The market for these loans is very competitive meaning that applicants with clean credit histories have a very good chance of getting low rate deals.
Unsecured Loans
With an unsecured loan, the lender has no security whatsoever. The lender simply relies on the loan agreement to be able to support a court action to recover any monies due. Therefore, the risk to the lender is significantly greater than with a secured loan. For that reason, interest rates for unsecured loans are always higher than secured loans.
Getting the best deal
Loans are one of the few products or services where it is not necessarily in your best interests to shop around. That's because every loan application you make is registered on your credit files that are held at the main credit agencies. The problem is that "multiple credit applications" will damage your credit rating.
So what should you do? Our advice would be to apply through a loan broker. They will take your details and their experience will tell them which lender is likely to provide the best deal for your circumstances. This saves you from having to make multiple applications.
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