What are your options?
A positive borrowing experience has a lot to do with choosing the kind of loan that fits your circumstances. You might need short-term finance with quick repayment, or a loan that gives you more flexibility in terms of when you pay it back. There are a number of key questions to bear in mind when you’re looking at the different types of secured loans and other personal loans:
Your personal loans options
With the answers to the above questions you can find yourself the right loan for you from the options available.
The short-term loan: payday loans
If you decide you need a loan over a short period of time (e.g. a month) and you don’t want to borrow a large amount then payday loans are fast and easy to arrange. The advantage of payday loans is that you don’t need to have a perfect credit score to be able to borrow so they act like bad credit loans. The application process is simple and cash delivery is fast. The disadvantage is that if your credit score isn’t great you might pay more interest – and you must be able to repay within the month.
The longer-term loan: personal loans
Also called ‘installment loans,’ personal loans are ideal for borrowing higher amounts and being able to repay over a longer period of time. Most personal loans are ‘unsecured,’ which means that you don’t need an asset like a house in order to borrow. Instead, borrowing decisions are based on your income, borrowing history and credit score. If you need to manage repayments over a longer period of time this is the loan for you.
The every person loan: ‘bad credit’ loans
Often, being able to borrow requires a good solid credit history – but what if you just don’t have this? Bad credit loans are available even to those without the perfect credit score, whether via a guarantor or just borrowing less for a shorter period. You might pay more interest with bad credit loans but you’ll still be able to borrow.
The flexible loan: guarantor loans
With guarantor loans a trusted friend or family member can stand as your ‘guarantor’ to guarantee the repayment of what you borrow if you can’t do it. If you don’t have any credit history, or you need to borrow more than your credit score allows for, guarantor loans can help you secure what you need.
The secured loan: homeowner loans
If you have an asset – such as a home that you own – then you will be eligible for a secured loan. Credit score has much less of an influence here, as the lender will take a charge over the home, which it can cash in if you’re unable to repay. You must keep up the repayments to protect your home. In terms of advantages, homeowner loans often offer larger borrowing amounts and lower interest rates.