Types of personal loans
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.
