Summary: unsecured loans can be availed by both the tenant and the homeowner. These loans do not require nay collateral to be furnished from the borrower’s side.
Basically, there are two types of loans in the UK financial market: loans given with and without collateral. Loans that are given in lieu of collateral from a borrower’s side are called secured loans, these loans have amassed a lot of popularity in the UK. However, according to statistics, record numbers of repossessions were witnessed last year (2006).
Secured loans are exclusively for the collateral owner. In other words, tenants cannot avail these kinds of loans. For them, there is the loan of the unsecured variety that comes with its own set of benefits.
Unsecured loans can be availed by the tenant, as well as the homeowner without the inclination to risk his house as collateral. These loans are primarily short-term loans, in that they fulfil immediate monetary demands. Unsecured loans can be used for a variety of purposes, like consolidating debts, funding vacations and educational expenses, renovating a home etc.
Unsecured loans start from ₤500 and can go up to ₤25,000. The repayment term is between 6 months and ten years. One of its greatest advantages is the lack of collateral in its case. The repossession factor is non-existent here, and borrowers can pay of the debt in a calmer and, subsequently, more organized fashion.
There are some disadvantages though. One is that the lack of collateral compels the lenders to hike the interest rates – a means of cushioning a potential default from the borrower’s side. Also, the relatively lesser amount will not meet some needs.
These loans can be availed from different sources, like banks, private lenders and the Internet. For sheer convenience and quickness the online option is doubtless the number one option. However, loan takers should be aware of the loan sharks (unlicensed lenders) that often accompany this territory. Still, they can be circumvented with proper research and comparison analysis.
About the Author: The author is a business writer and has written authoritative articles specializing on
secured loans and
personal loans in the finance industry. You can find more information about
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