Today’s loan market is vast. At times, it seems as though we can’t even get through a series of television commercials without being offered a loan of some sort. For those of us who are searching for loans, this can sometimes be useful, but, it is important not to get ‘sucked in.’ Instead, step back, look around, and find the type of loan that is right for you. Here’s my guide on the types of loans available to you.
In order to decide which loan is right for you, you first need to make sure that you are fully aware of what each loan does and how you will repay it.
Secured Loans: Secured loans are available to property owners or mortgage holders. As part of a secured loan, a lender can forcibly sell your house to get their money back if you can’t repay your loan. The ‘secured’ part means the lender gets ‘security’ not you. In the event you default on the loan, the lender can repossess your home.
Unsecured Loans: An unsecured loan is supported by the borrower’s creditworthiness and does not require the use of property as collateral for the loan. Generally, borrowers must have high credit ratings to be approved for an unsecured loan
Instalment Loans: An instalment loan is a type of consumer or business loan where the principal and interest are repaid in equal instalments at fixed intervals. These loans are commonly secured by the item purchased, or by the personal property (excluding real estate) of the borrower.
Guarantor Loans: Guarantor loans are unsecured loans that require a second person to act as a guarantor. They offer an ideal solution for people with bad credit, who would otherwise be unable to obtain a loan. Guarantor loans are not payday loans. The interest is much lower and you will not be charged any up front or arrangement fees.
Car Finance Loans: A car finance loan allows someone to acquire a car with any arrangement other than a single lump payment. Personal Car Finance is a complete sub sector of personal finance, with a number of different products available. Such products include a straightforward car loan, hire purchase, personal contract hire (car leasing) and personal contract purchase. These different types of car finance loans are possible because of the high residual value of cars, and the second hand car market which enables other forms of financing beyond pure unsecured loans.
Companies such as 1ststop.co.uk offer an online application form where you can fill in your details, after which they will call you to discuss your loan options. Be conscious, however, of what loans are available, and at what rates. Also, make sure you are fully aware of all of the terms and conditions associated with each loan in consideration. Some companies will charge upfront fees that you might not be unaware of until the very last moment. If you’re unsure, consult an expert for advice.