Loans and the various loan options and products available can be a minefield. Below we have explained some of the more common loans available. For more information about loans why not visit our sister site
Secured Loans A secured loan is secured on a homeowner's house or property. This kind of monetary advance can be used to finance a holiday, pay off an existing debt or temporarily increase cash flow. Secured loans are offered by all high street banks and building societies.
Unsecured Loans Lenders are taking a bigger risk when the prospective loan applicant does not have a property to use as the security. If you do not repay the loan, the lender has every right to take over property, usually through a company of baliffs who, will be required to act lawfully when entering premises or removing goods. This is a last case scenario and loan management routes can be employed to ensure the loan is repaid in full.
Personal Loans In the UK a personal loan is an advance of money from a bank to you. The lump sum amount can vary and you can decide how long you need to repay the loan in monthly instalments. Personal loans can be secured, or unsecured. Secured personal loans are backed by some other asset, usually your home. An unsecured personal loan, on the other hand, is given to those who do not own property. In either case the loan provider makes money through the interest charges that are added to your loan repayments. Banks sometimes sell personal loan insurance along with the offer of a personal loan, but you are not required to take this insurance in order to be accepted for personal loans
Car loans A car loan in the UK is not much different from an unsecured personal loan. It comes from a building society or bank, you make repayments over a period of time, which are a mixture of repayment of the capital as well as the interest that is charged upon the capital. As this is a type of unsecured loan, lenders are not concerned with what the money is for, so don't worry about having the car you purchase valued. But if you default on the loan, you can be taken to court, although the car cannot be automatically repossessed because car loans are not secured
It is a fact that most students will leave university with thousands of pounds of debt. As students are seeking out alternative ways of financing their education a student loan can help. Additional costs incured include accommodation, books, equipment, transport and and food. Financial institutions will often lend at a slightly lower rate of interest. The repayment of student loans does not usualy begin until the graduate has reached a certain earnings bracket.
Tenant Loans Traditionaly a more expensive form of finance if the loan applicant does not have a property to secure it against. The interest rates can be higher. The loan provider can, in the event of defaults on the loan repayments, take the property as collatoral and sell it on to recoup their loses.
Payday Loans this type of Loan is an emergency loan for people who need access to funds almost immediately. You can easily apply for these loans via the internet using a fax machine to give the loan company all the details required. The loan amount will then be paid into your bank account the next working day. To qualify for one of these loans you must be in receipt of a regular income which is paid into your bank account.