Loans: Personal Vs. Secured

<h1>Loans: Personal Vs. Secured</h1>Author: <a title="J Tillotson" href="http://www.articlesbase.com/authors/j-tillotson/38681.htm">J Tillotson</a> If you need a lump sum fast, perhaps to pay for this years holiday, a wedding, car or home improvements, you may need a loan. If your credit score is good enough, getting a loan is relatively easy. But which loan do you go for? This guide quickly compares the two most common types, personal loans and secured loans, to help you decide which one is best for you.

Personal Loans

<ul>

<li>Can borrow from £1000</li>

<li>Average maximum amount £20,000</li>

<li>Short-term – usually between 1 and 5 years repayments</li>

<li>Potentially high interest rates</li>

<li>Usually only available for people with decent credit scores</li>

<li>Can be used to consolidate smaller existing debts</li>

</ul>

<a href="http://www.moneysupermarket.com/loans/">Secured loans</a>

<ul>

<li>Can borrow larger amounts</li>

<li>Longer repayment terms – up to 30 years</li>

<li>Only available to homeowners</li>

<li>More accessible for people with poor credit ratings (if homeowners)</li>

<li><a href="http://www.moneysupermarket.com/loans/">Loans</a> are secured on your house</li>

<li>If you miss payments you could lose your home</li>

</ul>

In a nutshell, personal loans are useful for low-cost purchases and consolidation whereas <a href="http://www.moneysupermarket.com/loans/">secured loans</a> are better used for larger things like home renovations, for example. The risks are greater with a secured loan as your house is used as equity; which means that if you default on payment your lender is legally entitled to recover their costs by seizing your home. Defaulting on personal loan repayments could lead to court action and black marks on your credit file.

If you are in any doubt as to whether you could afford the repayments on a loan, don't apply. About the Author: J Tillotson is a financial author in the UKArticle Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/loans-articles/loans-personal-vs-secured-312660.html" title="Loans: Personal Vs. Secured">Loans: Personal Vs. Secured</a>

If you need a lump sum fast, perhaps to pay for this years holiday, a wedding, car or home improvements, you may need a loan. If your credit score is good enough, getting a loan is relatively easy. But which loan do you go for? This guide quickly compares the two most common types, personal loans and secured loans, to help you decide which one is best for you.

Personal Loans

Can borrow from £1000

Average maximum amount £20,000

Short-term – usually between 1 and 5 years repayments

Potentially high interest rates

Usually only available for people with decent credit scores

Can be used to consolidate smaller existing debts

Secured loans

Can borrow larger amounts

Longer repayment terms – up to 30 years

Only available to homeowners

More accessible for people with poor credit ratings (if homeowners)

Loans are secured on your house

If you miss payments you could lose your home

In a nutshell, personal loans are useful for low-cost purchases and consolidation whereas secured loans are better used for larger things like home renovations, for example. The risks are greater with a secured loan as your house is used as equity; which means that if you default on payment your lender is legally entitled to recover their costs by seizing your home. Defaulting on personal loan repayments could lead to court action and black marks on your credit file.

If you are in any doubt as to whether you could afford the repayments on a loan, don't apply.

J Tillotson is a financial author in the UK

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Article Tags: Loans, Secured

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