Loans can be availed to meet several financial requirements. Basically, there are two types of loans available in the market: secured loans and unsecured loans. Homeowners can avail secured loans by putting collateral against the loan amount. Tenants can avail unsecured loans, though this loan is not restricted to tenants alone; homeowners too can avail them.
Personal loans can be availed through a plethora of sources, like banks, building societies, private lenders and the online option. Of all these competent avenues, the last two have garnered tremendous popularity over the last decade or so. The online option, particularly, gives the borrower the facility of expediency and choice.
Secured personal loans come with a range of benefits, the most important being the borrowable amount. One can borrow up to £250,000 with the repayment term being as long as 25 years. Also, with collateral present with them, the lenders are at lesser risk here. In case of a repayment default from the borrower's side, the collateral can be sold off and the money recovered. Thus, lenders tend to alleviate interest rates with these loans.
With unsecured loans, there is no need for the borrower to put up any collateral against the loan amount. That, in itself, is the biggest advantage with this loan type. The borrower can pay off the loan amount with a better frame of mind. With unsecured loans, one can borrow up to £25000 with the repayment term being as long as ten years. However, with collateral absent, the lenders take the liberty of hiking up the interest rates to cushion any borrower default.
While borrowing personal loans, one should do so with prudence and a certain amount of discretion. People often make the mistake of borrowing loans are advertised with good rates of interest. However, there are a lot of unlicensed lenders in the market who do this just to lure customers in. Their loans often come with hidden and extra charges.
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