Whenever someone requires money, he can take out a loan from a bank or any other financial institution. Loans are basically of two types – secured and unsecured. In case of a secured loan, the borrower has to put up his property as a security, whereas in case of an unsecured loan, there is no need to offer collateral.
Secured loans have several advantages over unsecured loans. The rates of interest on secured loans are lower than the rates on unsecured loans. Lenders offer flexible repayment terms on secured loans. If you think that monthly installments of a loan are unaffordable, the lender may extend your loan period so that the amount of monthly installments gets reduced.
Secured loans can be taken out for a number of purposes. A secured home loan can be used to buy a house. A secured debt consolidation loan can be used to consolidate debt. There is a wide range of secured loan amounts that can be obtained. Lenders usually offer loan amounts ranging between £5,000 and £75,000.
There are several modes of applying for a
secured loan. One of the methods involves visiting the lender's office and applying for a loan. Many lenders also accept applications over the phone. This is less time consuming than the above mentioned mode of applying for a loan. Another method of applying for a loan involves mailing a written application. The method that is gaining popularity is the online loan application process. It offers borrowers the easiest way to apply for a secured loan.
Loans for amounts up to £25,000 are covered by the Consumer Credit Act, 1974. Such loans are known as regulated loans. Loans for amounts more than £25,000 are unregulated. In case of regulated loan, the lender has to offer a consideration period of 7 days to the borrower. An unfortunate event, such as death, accident, sickness, unemployment, may render you or your family unable to repay the loan. To avoid such a situation, the lenders offer insurance policies and payment protection schemes. If you fail to repay your loan because of any of the above mentioned reasons, the insurance company will pay the balance amount.
The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in Business Administration and is currently assisting Uk-loan-market as a finance specialist.
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