28 February 2008
The variety of loans available on the market in the UK these days means that many of us should have no problems finding the right loan for our needs, although those with poor credit may face more difficulty. In the current financial climate getting a loan can prove a little more difficult because credit conditions have tightened as a result of the credit crunch, but if you do your research you should be able to find a choice of loans from a variety of lenders, enabling you to find the right one to suit your needs, circumstances, and budget.
Below you will find a description of some of the most popular loan types:
Secured loans are loans that are available to homeowners, and these loans are secured against the home. Secured loans are often available to those with bad credit as well as those with good credit, and in order to qualify for one of these loans you need to be a homeowner ideally with some level of equity in your property. Secured loans offer greater borrowing power depending on your equity levels, as well as longer repayment period enabling you to reduce your monthly outgoings. It is important to keep up with monthly repayments on a secured loan otherwise you could risk losing your home.
Unsecured loans are available to both homeowners and non-homeowners, but you will generally need good credit to get one of these loans. These loans are not secured against any asset, and are based on contract and trust. The borrowing levels are not as high as with secured loans, and repayment periods are shorter.
Consolidation loans are designed to reduce monthly outgoings and reduce the number of debts that borrowers have to deal with. These loans are available on a secured or an unsecured basis, and are used to pay off smaller, higher interest debts, leaving the borrower with just one lower interest loan to repay rather than a range of higher interest debts.
Payday loans are short term loans that are usually offered for a one month period. These loans do not usually involve a credit check, but are subject to proof of employment and income. These are short term loans offered to tide you over until payday, and are ideal for emergencies where you need to raise cash until payday comes around. By way of interest you will be charged a set amount per £100 borrowed, and borrowing levels are low – usually up to around £1000 subject to income and eligibility.
Car loans are loans designed to finance the purchase of a car, and these loans can often work out cheaper than taking finance from a dealership. Some lenders offer additional perks with car loans, such as free HPI checks and reductions on breakdown cover or insurance.
These are just a few of the different types of loans available these days. No matter which type of loan you decide to go for you should make sure that you compare the market in order to find the best deal and the most competitive rate of interest.
Tags: secured loans, unsecured loans, car loans, loans, debt consolidation loans
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