Personal Loans Options Explained

Personal loans are probably the most popular of all loans that are taken out and they come in many different guises. A personal loan by definition is an unsecured loan that is taken out by a person for a variety of reasons. They are mostly offered by the major banks and building societies in the UK. However most of the banks have now decided that in order for you to qualify you must be an account holder with the bank. They are available for amounts of up to £15,000 and can be repaid over terms of up to 5 years. On top of the usual providers there are also several UK super market chains that offer this type of loan, as well as the more specialist lenders.

The fact that this type of loan is generally unsecured (the lender requires no collateral to be held as security), the more main stream lenders will usually only lend to people with a relatively good credit record. This means that anybody with no credit history (not having borrowed any money previously), or a bad credit record (late payments, CCJ’s and arrears or defaults) will find it more difficult to arrange a personal loan without going to one of the more specialist lenders and their products detailed below. Unfortunately this will mean that if your credit history forces you down the route of taking a loan with one of these specialist lenders the interest rate that you will be charged will be more expensive.

Payday Loans: A payday loan is a short-term loan for amounts from £75 to £750 that is repaid in full on your next payday. This is by far the most popular of all loan types currently being approved in the UK. With the number of people who are taking advantage of this type of borrowing growing month on month. It’s alarming growth rate is due to a number of reasons but mainly because they are quick and easy to arrange and can be paid out on the same day that you apply. They are designed to help people overcome short-term financial issues that need to be resolved very quickly, maybe your car has broken down and you need it fixed quickly so you can go to work, but you do not have the money put aside for it. This type of loan is also very easy to understand, because the lenders explain to you right at the outset how much the loan will cost you, and you know that it will be paid back when you next receive your salary.

Guarantor Loans:This probably the most forgiving of any loan in as much as it is available to a great many people no matter what their credit history, so long as they are not registered as bankrupt or in an IVA. They will even offer a loan to a person that is currently unemployed! This type of loan can be taken out for sums from £500 to £5,000 and can be repaid on terms from 12 to 60 months depending on the amount borrowed. The reason that the lenders can be so flexible with this type of loan is the fact that they require a guarantor to act as co-signee who guarantees that the repayments will be made. This means that if you take out a loan of this kind and do not keep up with the repayments they will be collected from the guarantor.

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