Car loans

Home loan

Secured loan

Debt consolidation loan

Personal loans are mainly loans for a small amount of money between £5,000 and £60,000 borrowed on a unsecured or secured basis. The loans can be used for a number of things:

Holidays
Cars
Home improvements
Basically anything personal

Secured loans are loans which are given to the borrower with the lender holding something as collateral. The collateral in many cases would be the borrowers home, the borrower can borrower anything up to 125% of the home value.

If the borrower was to stop making payments then the lender has the right to take the collateral placed down as payment. Aspects such as any other existing debt on the property such as mortgages etc would be taken into consideration when the amount is loaned.

Because the lender has security you will find that the interest rates charged are much lower than an unsecured loan. Taking out a secured personal loan can take longer than taking out an unsecured loan due to extra checks that are made on your collateral.

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A unsecured loan is when the lender has an agreement with the borrower that all payments will be made on time and in full. The money is given upon your past credit history. Credit history is a check done on past credit transactions e.g. credit card payments being paid on time and in full.

The interest rates for unsecured loans are higher than secured loans because of the high risks the lender takes when giving out money with no collateral to fall back on when payments are not made.

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Make sure that if your loan is a secured loan that you take out insurance. This will protect you if you were to miss a repayment due to being laid off work or falling ill because of a medical condition.

Taking out insurance gives the borrower extra security knowing that the collateral placed (property) will not be taken away if payments are not made on time.