Online Loans: a quick guide
With today’s economic climate getting accepted for a loan is becoming increasingly difficult. Interest rates on loans have been rising and the cheapest deals are only available to those with the best credit history.
It has never been more important to compare loans to be able to find the best deals on the market that could save you money. There are generally two types of loan, they are secured and unsecured.
Secured and Unsecured Loans
The main difference between secured and unsecured loans is that a secured loan is only available to those who can secure the amount borrowed against a financial asset, usually property. An unsecured loan or personal loan as it is commonly known is based only on your personal circumstances like how much you earn and your monthly outgoings.
Unsecured loans are generally more difficult to be accepted for, you are limited to how much you can borrow and the interest rates are typically higher than those of secured loans.
Typically with a secured loan, the amount you can borrow ranges between £3000 to £50000, however there are lenders who can offer more and the interest rates are generally lower. The most you could generally borrow with an unsecured loan would be £25000 but lenders would be very cautious in lending you an amount this high without a good credit history or security against the loan.
Longer repayment terms are available for secured loans, with standard unsecured products, the maximum your repayment term could be is 10 years.
An important thing to bear in mind is that the longer your repayment terms, the more interest you pay, although a secured loan may have a lower interest rate it may end up costing you more over the term of the loan. It is also important to remember that when taking out a secured loan you are ultimately putting your assets at risk if you fail to make the repayments.
How to pick the right loan?
You will need to ask yourself the following questions before you apply for a loan;
- How much do you need to borrow?
- Do you own a property and do you have to put it at risk?
- Is your credit history good?
- How much can you financially afford to repay each month?
The more you want to borrow the more likely you will need to apply for a secured loan. In most cases it is advisable to go for the shortest term you can comfortably afford, the longer your term the more interest you will pay.
Loan Protection Insurance
You can compare loan protection insurance with comparethemarket.com to find the most cost effective deals suitable for you to help you to keep up the repayments if you couldn’t work due to an injury, illness or redundancy.
More Information…?
To learn more about unsecured loans, have a read of our quick guide to help you chose the right personal loan for you.
Unsecured Loans: A quick guide
Important things to remember
If you think you may be able to repay your outstanding balance earlier than the agreed term you will want to look for a loan that does not carry an early repayment charge.
The best deals are typically only available to those with the best credit scores, every time you are refused an application it may impact your credit rating so it is advisable to only apply for the loans that you are confident of being accepted.
Using comparethemarket.com could save you time and money when shopping for the right loan. See how much you could save and compare loans today.
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