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Personal Loans in the UK typically fall into two different classes “Secured” and “Unsecured”. Deciding on which is best for you will largely depend on your residential status, employment status and also your personal credit profile.

The main benefit of choosing a secured loan is that you will be able to borrow more (typically over £25,000) over a longer period of time ( up to 30 years). A secured loan can also be considerably cheaper than an advancement on your current mortgage, although some lenders may not allow you to do this.

Because the loan is secured against your property the total interest repayable is often far less than an unsecured loan, and your credit history becomes less of an issue.

The main disadvantage with an unsecured loan is that you will be restricted on the amount that you can borrow (typically below £25,000).

Unsecured loans are also more likely to incur higher rates of interest as the lender will have no form of security against the loan. When being considered for an unsecured loan your credit history and employment status will ultimately be the deciding factor.

If you have bad credit you are unlikely to be offered an unsecured loan or if you are then it is likely you will be offered a high rate of interest. However if you have bad credit and choose the secured loan route the rate offered is more likely to be a competitive one.

If you are applying for any type of loan and are unsure how your credit history looks in the eyes of a potential lender you can contact a credit reference agency. The cost of attaining a record of your credit is very little and is a worth while exercise if you haven’t checked before.

Their are many factors to take into consideration when applying for a loan. The APR or Annual Percentage Rate is a good place to start when comparing any loan plan. The APR figure lets the consumer know the amount of interest added to the loan per annum, however different plans calculate APR in varying different ways.

If the deciding factor on whether or not you accept a particular plan is based on monthly affordability you should always ask for a personalised illustration of the loan. A personal illustration will provide you with accurate figures as to the amount repayable each month and the total amount repayable at the end of the loan plan.

Two other factors to bear in mind are typical APR and set APR. By law, if a lender or broker promotes a typical APR this figure must reflect two thirds of all accepted plans offered by either the broker or lender, as a percentage this equates to 66% of all completed loans. A set APR means that all customers will be eligible for that rate. By definition the best loan plans are usually dictated by the typical rate, but you must be aware that the typical is circumstantial.

In summary, you should always obtain a personal illustration of the loan before committing to the plan. Use the monthly repayment figure and total amount repayable to you as a deciding factor.

A home loan is probably one of the best ways of attaining credit if your looking for a good deal. Their has been quite a lot of press coverage recently on the subject of credit cards and the likely hood that we’re all paying over the odds when using them as a form of credit. People have become to use to the convenience of using a card and are either happy with the rate they have or prefer the ability to spend on a “as is” needed basis.

However,  for home owners looking for a lump sum a secured loan is by far the better option. Lenders are far more likely to accept customers for a competitive loan plan if they are a home owner. For the lender it means security as the loan is effectively “secured” against the home as a form of collateral. For the consumer 9 times out of 10 it means a better deal.

The secured loan sector has become fiercely competitive and as a result consumers are being offered some of the lowest rates of interest ever. Their are of course draw backs with this particular form of finance, the main of which being that the loan is agreed on the basis that your home is offered as collateral against the lend, meaning that miss payment could potentially result in repossession. However, this should not really be seen as a negative if you are confident that you can afford the loan repayments and are happy with term.

More and more consumers in the UK are opting for a secured loan over credit card borrowing. The main two reasons for this change in trend is said be due to the increasing interest rates associated with credit cards and the increase in home equity due to rising house prices.

Homeowners seem to be realising that they can have quite handsome sums tied into their property which can be released by either remortgaging or through a secured loan.

Credit card borrowing can be quite costly even on cheap cards compared to the cost of securing a loan against the equity in your home.

That said, consumers should still be vigilant when shopping for secured loans as rates and interest repayable can vary massively. However, as a means of attaining credit at an affordable rate, secured loans can almost certainly be the better option.

A recent statement by the BBA suggested that credit card borrowing in January was weaker than the second portion of last year, whereas mortgage borrowing continued to grow with a high rate of acceptances in the latter part of 2006.

In response to recent news regarding sub prime loan lender New Century Financial, Barclays Bank has announced that it will not be affected seriously by the situation.

New Century has recently been delisted from the new york stock exchange and is required to pay back £464 million in sub prime home loans instantly. Barclays declared that its association with the loan lender did not pose any real threat to the bank.

 Their have been fears that the situation in the US could spill over to the UK, however analysts do not expect this to happen. The HSBC has reportedly lost over 10 billion in 2006 due to loan defaults and miss payments in the sub prime market.