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If you are looking for a loan you may be overwhelmed by the number of loan companies, and types of loan, that are available. Here is a quick guide to the main three loans that you may be considering; unsecured loans, secured loans and consolidation loans.
An unsecured loan, also known as a personal loan, is usually up to the value of £25,000 and can be borrowed based on both the lender’s perception of your ability to pay the loan back and your personal circumstances.
Unsecured loans are available for many different amounts and repayment periods; usually with larger loans taking longer to pay back. Unsecured loans are perfect for borrowing small amounts over a short period of time and there is no security, such as your house, required in order to take out the loan. Always ensure that you can make the repayments each month through budgeting as missing payments will have a bad effect on your credit history. Unsecured loans are not ideal if you already have a number of debts that you are paying off.
Unsecured loans often have a quick turnaround time meaning that the money can be in your account soon after your application has been accepted and, if you would like to, you are usually allowed to pay off the loan early.
A secured loan, unlike an unsecured loan, requires you to pledge an asset against the loan that you are taking out, usually your house. This is a good option is you are finding it difficult to take out an unsecured loan for whatever reason and you can usually borrow up to around £250,000.
A secured loan will often have lower repayments than an unsecured loan as lenders can offer competitive rates due to securing the loan against an asset of yours. This also means that secured loans are also more accessible to those with poor credit ratings than unsecured loans are.
If you are not looking to take out a loan for a long period then secured loans probably are not for you as their repayment periods are typically a lot longer than those of unsecured loans.
If you have a number of debts that you are looking to pay off then a consolidation loan may be the best choice for you. Consolidating all of your loans into one can lower your monthly payments and remove the hassle of having several payments to organise each month.
Consolidation loans will often make your debts run over a longer period of time and you will not have a lot of flexibility if you circumstances change. However, you may pay off less in the long run if you consolidate debts with high interest rates.
If you have any questions about unsecured, secured or consolidation loans, or want to talk to someone about applying for one, you can contact www.Best4Loans.com through their short online application form or call them on 0844 344 5777.
By Sasha Davison
10th March 2014
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