Hello and welcome to Solution Loans. This
short video covers a guide to personal loans. Personal loans are unsecured loans that do
not require the borrower to put up a form of security – be it a house or vehicle or
jewellery – as a guarantee to the lender. So they differ from homeowner loans, logbook
loans and other forms of secured lending. There is also no requirement for a third party
to act as a guarantor. The lender bases a decision on whether a borrower will be able
to repay the loan by assessing the applicant’s creditworthiness, income and other forms
of financial commitments.They can offer a borrower an affordable option to pay for a
car or a holiday in a flexible way with repayment schedules which can range from one to 10 years.
Most people who successfully apply for a personal loan are able to borrow between £1,000 and
£25,000 and there are lenders who have financial products for non-homeowners as well as tenants
& homeowners. Interest rates are lower than for other forms of finance and there are now
personal loans available for borrowers with less-than-perfect credit ratings. Personal
loans are available from a wide range of lenders and applicants are not restricted to the traditional
High Street banks. So how exactly do personal loans work? There are probably more unsecured
loan products on the market than any other type of loan with each lender having different
acceptance criteria, different repayment schedules and different interest rates. In general,
however, the more that you borrow, the lower the APR you are likely to pay but this will
depend upon your financial circumstances (including your credit report) and the length of the
repayment schedule. If you have a good credit history, then it’s likely that you’ll be able
to access personal loans with the lowest interest rates. However, there are increasing numbers
of loans available to people with less-than-perfect credit histories and interest rates on these
compare favourably with other forms of lending – especially against credit cards and store
cards. Most personal loans are offered with fixed rates meaning that you’ll know exactly
up front how much you’ll have to repay and what the monthly repayments will be for the
term of the loan. This can be particularly useful if you need to be able to budget well
in advance to suit your own lifestyle. The APRs offered vary according to changes in
the bank rate but once you’ve been accepted, your interest rate will not change. So why
would you apply for a personal loan? An unsecured loan could be the right form of finance for
you if you’re looking to borrow a fairly substantial amount, if you don’t want to end up paying
a very large amount in interest charges and want to know exactly how much you’ll be repaying
over the duration of the loan. Personal loans are frequently used to fund home improvements,
car purchases, and holidays or even to consolidate other debts. So what are considered the downsides?
While not having to provide security in the form of a home or a vehicle for a personal
loan and despite there being a wider range of them on offer, there are still fewer unsecured
loans available to applicants with poor credit histories. You’re also likely to have to pay
a higher interest rate than with a secured or guarantor loan and the amount that any
applicant will be able to borrow – irrespective of credit history – will be less than with
a secured loan. Repayment schedules are also shorter although you can still choose to repay
over timescales over 10 years. If you’re considering an unsecured loan, bear in mind that if you
find yourself in a position to repay the loan early, you could still face early repayment
fees, although you could reduce your interest charges significantly. Although these loans
are not secured against property, lenders can still pursue a defaulting borrower’s assets
through the courts. So in conclusion personal loans provide access to safe forms of finance
for large numbers of borrowers who do not want the risk of securing their loan with
their house or other possessions. They also mean that any equity you’ve built up in your
house is preserved should you get into financial difficulty. Tenants as well as homeowners
are accepted for many personal loans. Personal loans also provide cheaper forms of longer-term
finance than credit or store cards and are generally lower cost than overdrafts over
the long term.

Leave a Reply

Your email address will not be published. Required fields are marked *