Personal Loan
What is a Personal loan?
Another name for an Personal
loan is an unsecured loan. This type of
loan is very different from a secured
loan as the money is not tied into
your assets, for example your property or car. This means that the borrower
is not likely to loose these assets if payments are missed or not made.
Due to the nature of this loan borrowers will have to undergo comprehensive
history taking on financial background such as previous mortgage repayment
history, credit ratings, etc. This is done to help minimise the risk
of the lender.
How much can I borrow?
Anything within the region of £500 - £25,000 can be borrowed
on a secured loan. The
payment terms are usually on a monthly basis between twelve to twenty
four months. This however is not fixed and will depend on the risk profile
of individual borrowers. There is no uncertainty of repayments fluctuating
from month to month with this type of loan because
repayments are fixed. This can be an advantage of this type of loan compared
with some types of mortgages. As a result of the interest
rates on unsecured
loans being as competitive as mortgage rates and in
some cases lower, in recent years the popularity of these loans has increased.
What about my credit history?
Those proposing to take out an unsecured
loan that have a poor credit
history, are more likely to find it difficult to take out this type of loan and face much higher interest rates when paying back this loan as
they are put into a higher risk category. For this reason, borrowers
with a poor
credit history should think carefully prior to committing
to this type of loan as what may seem like a good idea at the time, could
be to be regretful at a later stage.
The amount a vendor is willing to lend will depend on a number of factors
such as which vendor you decide to go with, the borrower’s financial
history, etc. Lenders include the more obvious such as high street banks and building societies as well as specialised lenders. The latter option
is often the more lenient in terms of selection criteria to obtain the loan.
An unsecured loan can be used for many purposes such as home improvement,
purchase of a new car, a holiday, paying off debts, etc.
Generally, if
a borrower has a good credit history, obtaining this type of loan can
be simple and quick therefore making it an attractive option.
If you would like to make an application for an unsecured loan please click here...
