Personal loans come in two basic forms ? unsecured and secured. Depending on your credit history and whether or not you are a homeowner, the type of personal loan available to you may vary. When you apply for a personal loan, the lender will carry out a check on your previous borrowing history and will come to a decision based upon your previous credit history. If you have a good credit rating and want to borrow a smaller amount (under ?25k) over a shorter repayment period (usually no more than 10 years), then it is likely you will be accepted for an unsecured personal loan. These normally come with a higher interest rate than a secured loan. However, the loan is not secured against any of your assets and is granted based on the lender?s opinion that you have the ability to fulfil the repayments so they are a good option for lower sums of borrowing and especially if you are not a homeowner.
If, however, you are looking to borrow over ?25k and you are a homeowner, then the secured route is your likely option. With a secured loan, you can often borrow up to 125% of your home?s equitable value over a timescale ranging up to 25 or 30 years. As the lender is securing the loan against your property, interest rates are lower and it usually provides a cheaper option as a longer term finance solution than an unsecured loan.
If, on the other hand, you have a bad credit history, then even though it is difficult to obtain a loan on the high street, there are many reputable brokers who specialise in bad credit loans. With an estimated 1 in 5 people in the UK having some kind of adverse credit history on their file, brokers can offer people with bad credit an unsecured loan. In most cases, however, they will usually encourage homeowners who have a poor credit history to opt for the secured route to minimise the risks. Therefore, even if you do have CCJs, arrears and a bad credit rating, you can still pick up great deals on secured loans and, as the loan is secured against your property, the lender does not need to worry about your previous credit history.
A debt consolidation loan is a way to bundle all your credit cards, store cards and HP agreements into one simple affordable monthly repayment. They have a great reputation for enabling people who have amassed a lot of multiple debts to get back on track. They come in both unsecured and secured form and will usually mean a lower interest rate than all of your other existing agreements leaving you with more money in your pocket. If your other combined debts are over ?25k and/or if you have bad credit, then the secured option will be the route to take but if you have a good credit history and your debts are less than ?25k, then the unsecured route may be your preferred choice.
Therefore, when it comes to the loans market, there are many options available no matter what your circumstances and it is simply a matter of finding out what are the best options for you personally.
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