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LOANS PERSONAL & SECURED

Personal Loans.

Personal Loan (or unsecured loan) is a loan provided by a lender or bank that is not secured against any assets that you own. With a Personal Loan you can choose how long you would like to take to pay off the loan amount however, the amount of time you take can affect the amount of interest charged.

It is helpful to note that you can pay off or over-pay a personal loan at any time before the end of your agreement without facing any additional charges or penalties.

 

Advantages & Disadvantages of Personal Loans.

Advantages - A Personal Loan usually charges a lower interest rate when it is compared up againts that of credit cards. These interest rates are typically fixed throughout the duration of the loan period. On top of this the payments required each month will typically stay fixed making it far easier to budget throughout the month when you know exactly what you have to pay.

Disadvantages - With a Personal Loan most banks won't lend less than £1000 which might result in people taking out more money than they actually need or more than they can actually afford. Some lenders may implement lower interest rates in relation to how large of a loan you take out. This may also lead to people being tempted to take out more than they need or can actually afford.

Secured Loans.

A Secured Loan is typically a loan that involves a large sum of money being loaned from a lender, usually more than £10,000. With a Secured Loan you will have to offer the lender an asset that they will receive if you are unable to pay off the loan, usually that being your home.

Advanatges & Disadvantages of Secured Loans.

Advantages - With secured loans you will typically pay a far less interest rate than that of a personal loan as your loan is secured against an asset. Repayments with a secure loan typically have a fixed interest however some lenders may not offer this so make sure you are well informed before agreeing to a loan.

Disadvantages - The main downside to a secure loan is that if you fail to keep up with the payments then the lender is allowed to take any asset you have signed onto your loan. On top of this many loans have variable interest rates which could result in your repayments increasing during the duration of the loan period.