People take loans when they feel that a requirement cannot be met through regular income. Loans can be taken to finance a variety of requirements: consolidating debts, financing education, renovating homes etc.
There are two types of loans in the market today: secured personal loans and unsecured personal loans. Secured loans are those loans that are offered to the borrower in lieu of an asset that is kept as collateral. These loans can be classified as long-term loans.
Unsecured loans do not require the borrower to put any asset as collateral. These loans are primarily short-term in character.
Personal loans can be availed from a plethora of sources, like building societies, banking institutions, private lenders and the Internet. Private lenders and the online facility are very much in vogue, with both providing the borrower expediency and choice. The Internet is the best in sense that everything can be accessed from the comfort of one’s home. All it needs is a computer and an Internet connection.
Unsecured personal loans range from ₤500 to ₤25000. These loans have a slightly higher interest rate as compared to secured loans. The hike in rate is principally due to the absence of collateral with this loan type. The lenders perceive this as a risk and duly elevate the interest rate as a means of keeping a margin against a potential default. These loans cater to smaller monetary needs, with the repayment term ranging from a year to ten years.
Secured personal loans range from around ₤5000 to ₤250000. There are several advantages with this loan type. With collateral in place, and the risk greatly abated, lenders give far more leeway on interest rates. The bigger amount caters to bigger needs, and the repayment term (five to twenty-five years) can facilitate better management of finances.
However, acquiring the model personal loan needs concerted research and comparison analysis.
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