Types of Personal Loans - Secured and Unsecured Loans

Guide to Personal Loans - Page 3

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Types of personal loans

Despite the growing number of money lenders around, there are really only two types of personal loan on the market, secured and unsecured. The table below compares the features and common uses of secured and unsecured loans:

	Secured Loan	Unsecured Loan
Description	An asset, usually a property is used to guarantee the loan. Approval is primarily based on the value of your property rather than your credit history. Failure to keep up your regular payments could result in the lender selling the asset to repay the loan. This type of loan is also known as a home owner loan.	An unsecured loan is not secured against an asset or property. Approval is primarily based on your credit history, however, If you own a property you may get preferential terms. Failure to keep up regular payments could affect your credit rating. This is the most common type of personal loan.
Borrowing Features	larger amounts up to £50,000+ flexible repayment plans longer payment terms up to 25 yrs available if self employed poor credit history and/or County Court judgements not excluded lower interest rates fixed or variable interest rates	smaller amounts up to £25,000 less flexible repayment plans shorter repayment terms around 5 to 6 yrs more detailed credit checks don't have to own a property higher interest rates fixed interest rates
Common uses	Home improvements Debt consolidation Car loan Larger borrowing over a longer period	Holiday Household goods purchases Wedding Smaller borrowing over a shorter period

Note: If you own a property and you want a personal loan for home improvements seek financial advice as it might be more appropriate for you to re-mortgage and raise the funds that way instead.

Download the Personal Loan PDF Guide here - see our other free PDF guides here

Guide Contents

What is a personal loan?
Managing your loan
Types of personal loans
Find a loan that suits you
Apply for a personal loan
Frequently asked questions
Where can I go to get more personal loan help?

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