Loans Articles


Summary  

Unsecured loans charge higher interest being riskier for lenders. Lenders can force you to sell your home if you default on repayments. A secured loan is based on your equity in your home, not its full value.

 

Insecurity Is Expensive

 

Secured Loans In UK Are The Best Option For Borrowers
A good introduction to the topic of secured loans
Don't Let Your Personal Loan Become a Personal Moan
Good background reading before you take out a loan
Use Bad Credit Home Loan To Get Funds Despite Poor Credit Ratings
Bad credit loans can be expensive. This article provides some useful advice
Loans For Bad Credit
If you've got a poor credit history, can you borrow and if so how much ? This article explains.
Insecurity Is Expensive
Unsecured loans charge higher interest being riskier for lenders. Lenders can force you to sell your home if you default on repayments. A secured loan is based on your equity in your home, not its full value.
Life Insurance News
  An unsecured loan, if you can get one, charges much higher interest rates than a secured loan because the lender is taking a much higher risk on the deal. If they don't have a hold over an asset of yours, for example your home, which they could force you to sell in order to repay the debt in the event of you defaulting on the payments, they stand to lose a lot of money. This probably would not happen for a loan of around 500 pounds which is on the low end of the scale of unsecured loans, but at the higher end, a debt of 25,000 pounds would probably mean just that.

A credit check is essential before any lender will grant you a loan of any type, and your credit history will be scrutinised minutely for any blemishes. Lenders use a scoring system to assess a potential borrower's credit-worthiness and a poor credit record will mean a low mark. In that case they might refuse you a loan altogether, or offer you a smaller amount than you wanted, or jack up the interest rates in accordance with the risk factor.

Loans that are secured against an asset, usually the equity in your home, are generally more easily obtainable. The equity in your home that you actually own is what is left after any secured loans and mortgages are subtracted from the current valuation of the property. A lender would use this end figure to base their loan on. So if you should default on your payment the lender would be secure in the knowledge that they could realise this amount on the sale of your home.

Secured loans are generally for higher amounts; say from around 5,000 pounds up to 100,000 pounds, with repayments over a ten to 15 year term. There is more involved in getting a secured loan as the property has to be valued and the deeds of ownership inspected, so getting one can take a bit longer.

You may still be able to find a lender to offer you a loan even if you have a County Court Judgement or mortgage arrears on your record. You would have to pay higher interest rates than with an ordinary loan and you would probably not be offered more than 25,000 pounds, as yours would be considered a ‘bad credit loan'. But don't forget that the loan would not be against the total value of the house, but against the ‘piece' you actually own, and you would lose your home if you didn't make the repayments.

However, the fact that the lender has agreed to give you a loan, albeit a bad credit loan, means that he believes you should be able to make the repayments. If you do so assiduously you will show you are reliable and be able to present better credentials for any future loans.

At the end of the day what counts is the amount of interest you pay on a loan. You should be able to get a good deal if you own your own home and have a good credit record.

The best deals of any type of loan will be found on the internet. Go for an independent broker who will research a variety of lenders and products and offer you a choice of deals best suited for your particular financial situation.