Consumers these days can choose from a range of different loan options to suit their needs and circumstances, and all loans come under one of two categories, which is either secured or unsecured. The type of loan that is likely to best meet your needs will depend on your circumstances, as there is clear eligibility criteria in place when it comes to these different loan types.

For example, if you are a homeowner with good credit then you will be able to enjoy the luxury of choosing between a secured or unsecured loan. If you are not a homeowner then you will not be eligible for a secured loan, as these are secured against the home. If you do not own your own home and have decent credit then you may find that you can take out an unsecured loan. If you have bad credit but you are a homeowner then a secured loan will be your most likely option.

It is important to consider the pros and cons of both of these loan types before you reach a decision, as there are both benefits and risks to take into account. There are many different lenders that offer both secured and unsecured loans, and it is advisable to browse and compare the different loans in order to try and find the best deal for your needs. You should also avoid applying for a loan that you are not eligible for, as this will simply result in rejection, which could damage your credit.

A secured loan is a loan that is secured against the equity in your home, and whilst house prices may now be coming down many homeowners have seen their property values rocket over recent years, giving them increased financial leverage and the chance to borrow substantial sums of cash against their homes. With a secured loan you can often enjoy greater borrowing power as well as longer repayment periods, which means that you can borrow more money and keep your repayments down, although your borrowing power will be based on your equity levels and other factors.

However, there are risks to consider when it comes to a secured loan. Because these loans are secured against the home you could end up losing your property if you default on the loan. Also, if you borrow up to most or all of your equity levels you could find yourself in negative equity if property prices continue to fall. In order to qualify for a secured loan you do need to be a homeowner, but on the upside you can often get finance even if you have bad credit because of the secured nature of the loan.

With an unsecured loan you need to remember that the borrowing levels are generally lower, usually up to £25,000, and the repayments periods tend to be shorter. You do need good credit to get an unsecured loan, although you do not need to be a homeowner. The good thing about unsecured loans is that they are not secured against any asset, so you will not be risking your home or other asset if you do fall behind with repayments.

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