About Personal Loans
There are two basic types of personal loans available being unsecured personal loans and secured personal loans.
Unsecured Personal Loans
An unsecured personal loan is usually for a smaller amount over shorter term.
These loans are riskier for the lender so the interest rate is higher, they will also usually have higher set up fees.
People take out these short term loans for things such as a holiday, household expenses, school expenses, medical expenses.
Unsecured personal loans are usually taken when buying older second hand cars, as lenders will not give a secured personal loan on older cars.
Unsecured personal loans are harder to apply for, as there are no assets to set against them, the lender will want more proof that you are able to make the repayments.
Secured Personal Loans
Secured personal loans are usually for larger amounts, such as for a car or other vehicle or a large home renovation.
A secured personal loan is taken out against an asset that you own, or against the car you are buying for example.
This gives the lender security in the case that you cannot repay the loan as the lender can then repossess that asset and recover their money.
Secured personal loans are classed as a lower risk loan therefore they offer lower interest rates to the borrower.
Secured personal loans can be taken out over a longer term making the repayments easier to manage.
Once you have decided what you want a loan for and you know what your financial situation is then you can make a decision on which loan is better suited to you, a secured personal loan or unsecured personal loan.