So you need money? With so many varieties of loan and lender on the UK market there is a finance option to suit most people, it is just a matter of understanding what type of loan best suits your financial need and personal circumstance. Even those with poor credit history can secure a suitable loan even in today’s current climate where credit conditions have tightened, it is a matter of understanding what options are available to you and the repayment rates that come with the agreement. This article will give an overview of the two most popular types of lending options that are available in the United Kingdom and who is eligible to apply for each.
Secured Loans
A secured loan is an agreement that involves the borrower pledging that he/she will repay the loan within a specific period of time. This requires the borrower to make reasonable contribution of collateral in order to borrow the money from the lender. This can be applied against the loan as a security; meaning that the lender will get their money back in the agreed time allocated. A low cost secured loan will use your home as collateral. UK banks will not give a secured loan to anyone that does not have a home to put forward as collateral. Borrowers with bad credit history can also apply for this loan type but there will be a matter of some preliminary research involved as there are institutes that will lend to people who are unable to qualify for a secured loan from a UK bank. Interest rates on a secured loan will depend on a number of factors including; value of your home, how much equity you have built over the years and the amount you wish to lend. The amount you qualify to lend will also depend on equity built and home value. If you default on a single repayment this does not mean you will lose your home; lenders understand that personal circumstances can temporarily change from time to time and if this is simply a one off then it is to be discussed with the loan provider and appropriate action agreed. If you can not repay the loan the lender will take action to possess and sell your home to acquire the lent amount. If there is an amount uncovered from the sale of your home you will be responsible for the further repayment of that outstanding amount. A secured loan is a great option if you are confident in your ability to repay the amount you require in the agreed timescale, as the leverage being your home you have a lot to lose in the event you can not meet your repayment schedule.
UK Guaranteed Loans
A guaranteed loan is a loan which is somewhat pre-approved for those with a good credit rating but this is quite different for those with bad credit history. It is still a lending option for borrowers with a poor credit scoring as this particular loan type is designed for borrowers who fall into this category. You will need collateral to apply for a loan of this type, lenders will typically accept things such as your home or an expensive car. The quality and value of the collateral can affect the rates of repayment that you will be offered. It is possible to secure a guaranteed loan without collateral as some providers will enter an agreement without. This will make the loan be unsecured and you will be unable to apply for large sums of money. The loan amount will not be a substantial amount and will be even less if you do not have collateral to offer when making the agreement. So, if you are seeking a large sum of money it is perhaps not the best lending option for you. This loan type can cover things such as small expenses or bills but isn’t the type of loan for a house or car, but is incredibly useful and simple for the smaller things. If you don’t repay the loan the lender will seize whatever you put up as collateral and resell in an attempt to cover the loan amount. If collateral isn’t part of the agreement some sort of legal action will be taken in an attempt to settle the loan with a new repayment schedule which suits the lender and borrowers’ circumstance.
Author Bio: This is a guest post from the content team at www.fridayfriday.com.