Most of the personal loan products available in the UK loan market are unsecured. Unsecured personal loans however make a hole in the borrower's pocket every month because of their high interest rates. The repayment term of such loans is also long. Not only the repayment of loan but also the charging the interest rate is higher than this.
Secured personal loans, on the other hand, have easy terms and conditions for the borrowers. Since the loan is secured against collateral, the lender can afford to offer lower interest rates. The borrower is also given the option of choosing a long repayment term if he wishes to. Long repayment term and low interest rates bring down the monthly payments quite substantially. The only disadvantage of the secured loans for the borrower is the risk factor. The lender can confiscate and sell off his property that he has offered as collateral, if he is not able to repay within the stipulated time.
Borrowers can put the
secured loans to a number of uses. They can use it to
Consolidate all their past debts
Pay off their long medical bills
Renovate their house
Purchase a vehicle
Finance the education of their children
Meet the expenses of an exotic holiday trip
Finance a wedding in the family
Secured loans are available to people with bad credit record also. Since such loans are secured, the lender can afford to ignore the poor credit history-that is usually a consequence of arrears, missed payments, county court judgements (CCJs), defaults in payments and bankruptcy-of the borrower.
Before you apply for a personal loan that is secured, compare the interest rates of the lenders UK. A comparison will help you choose the right plan for yourself. In case you still have some difficulties, consult a financial expert.
The author is a finance expert and is currently working with
Shakespeare Finance Ltd.
