Personal Loans

Personal loans are loans that are designed to be used for any purpose and are available on a secured or an unsecured basis depending on your needs, preferences, and circumstances.

A secured personal loan is one that is available to those with their own home, as these loans are secured against the equity in the home.

An unsecured personal loan, which are those often available via traditional high street lenders, is available to those living with friends or family and those renting a property as well as to homeowners that prefer not to take out a secured loan.

With a personal loan you can use the money for one of a range of purposes, and this could be anything from a luxurious holiday or new car to paying for an education or funding a dream wedding.

The interest rates charges on a personal loan can vary depending on whether you opt for a secured or unsecured personal loans and also depending on other factors, such as your credit rating, your circumstances, and the lender that you go through for your loan.

The repayment periods can also vary, but you will find that a secured personal loan offers far longer repayment periods than an unsecured personal loan.

The amount that you can borrow on personal loans will also depend on a number of factors, such as your income and expenditure, your credit rating and history, and if the loan is a secured one, the level of equity in your home, which can be worked out by taking away the balance of any outstanding mortgage or other secured loans from the market value of the property.

As with all loans, the longer your repayment period the less you will have to pay each month, as you will be spreading your loan over a longer term, which can help to keep repayments down. However, you will also pay more interest overall when you spread the loan over a very long period.

Although many people use their credit cards to pay for a large or special purchase such as a holiday or perhaps some expensive jewellery for a loved one, it can often be more sensible to use personal loans for these types of purchases.

This is because the interest rates on credit cards can be far higher than personal loans, and also the repayments on personal loans are more structured, so you know what you will be paying each month and when the debt will be clear.

If you don’t want to be in debt for too long then you can opt for unsecured personal loans, where you can take your loan out over a shorter period and make higher monthly repayments to get it cleared quickly.

When taking personal loans it is also important to consider whether you want a fixed rate. Most unsecured lenders offer their personal loans on a fixed rate basis, and this makes for easier budgeting as it means you make the same repayment every month throughout the term of the loan, other than the final repayment, which may be slightly more in order to make up any unpaid interest.

If you decide to consider secured personal loans, you should bear in mind that these are secured against the home and therefore failure to keep up with repayments could result in you losing your home.

Your credit history and rating will seriously affect your ability to get personal loans, and most people with a poor credit rating will find that they cannot get unsecured personal loans, and may therefore have to turn to secured loans, which means that they will have to own their own home with some level of equity in it.