There are two main types of personal loans: unsecured and secured. The type of personal loan you can get may depend on your credit history and whether or not you own your own home. When you apply for a personal loan, the lender will check your credit history and decide whether or not to give you the loan based on what they find. If you have good credit and want to borrow less than £25,000 over a shorter period of time (usually no more than 10 years), you are likely to be approved for an unsecured personal loan. Most of the time, the interest rate on these is higher than on a secured loan. But the loan isn't backed by any of your assets, and the lender gives it to you based on whether or not they think you can pay it back. This makes them a good choice for smaller amounts of money, especially if you aren't a homeowner.
If, on the other hand, you want to borrow more than £25,000 and you own your own home, you are likely to go the secured route. With a secured loan, you can usually borrow up to 125 percent of the fair market value of your home over a period of up to 25 or 30 years. Since the lender is backing the loan with your property, the interest rates are lower and it is usually a cheaper way to get money over a longer period of time than with an unsecured loan.
If you have bad credit, on the other hand, it may be hard to get a loan on the high street, but there are many reputable brokers who specialise in bad credit loans. Brokers can help people with bad credit get an unsecured loan. About 1 in 5 people in the UK have some kind of bad credit history on their file. Most of the time, though, they will try to persuade homeowners with bad credit to go the secured route in order to reduce the risks. So, even if you have CCJs, arrears, and a bad credit score, you can still get great deals on secured loans. Since the loan is secured against your property, the lender doesn't have to worry about your credit history.
With a debt consolidation loan, you can combine all of your credit cards, store cards, and HP agreements into one easy monthly payment that you can afford. They have a good reputation for helping people who have a lot of debts get back on their feet. They can be either unsecured or secured. Most of the time, the interest rate will be lower than all of your other agreements, which means you'll have more money in your pocket. If your other debts add up to more than GBP25,000 or if you have bad credit, you should go with the secured option. If you have good credit and your debts are less than GBP25,000, you may want to go with the unsecured option.
So, when it comes to loans, there are many options for everyone, no matter what their situation is. It's just up to you to figure out which ones are best for you.
