Summary

This article explains how loans work, what 'secured' and 'unsecured' mean and how to choose the right one for you.

Loans. Secured or unsecured? How to choose a loan. Page 2

Author: Anna Richardson

The lenders become a lot more generous with secured loans,

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especially if you have a good credit history. You can borrow anything from £5,000 to £75,000, depending on how much security you have in your house. For example, if the house is paid off, you will be able to borrow a lot more than if you have only been paying a mortgage for a couple of years. You'll also be able to repay over a longer period of time, as long as 25 years for a large loan. It's up to you whether you want to pay more in interest over a longer period of time, or try and pay it off as quickly as possible.

Going by the current interest rates, you can get a cheap rate of 5.8% on the internet, as long as you also have a very good credit history. However, if you're not so lucky and have a chequered past when it ( insurance ) comes to paying credit cards off on time, you could be looking at a rate of 17% to 20%. Approximately 50% of homeowners have imperfect credit records, and because of this, may find it nigh on impossible to be accepted for an unsecured loan. Getting a secured loan would be the only option in this scenario, and you will be charged a higher rate of interest too.

Unlike many other areas of finance, this is one area that you do not want to shop around for. ( online car insurance ) Well, at least not to the point of application. That's because every time you apply for a loan, it gets recorded on your credit history by Experian, Equifax and the other credit agencies, and your credit score goes down with each successive application. If you keep applying for loans, you'll be unwittingly affecting your credit rating until it reaches the point that your applications will be rejected outright. It's all too easily done and once your credit record has been damaged in such a way, it will take a few years to recover before you'll be able to get a new loan or credit card again.

So instead of making applications to lots of different lenders - go to an independent loan broker. They'll be able to tell from the information you give them which lenders will offer you the best rates of interest, ( life insurance quotes ) and will be able to give you specialist advice so you get the right loan for you. That way you will get the best deal, and without making applications to different lenders.

Look online for the best loan brokers - just type 'secured loan' into a ( best mortgages ) search engine and see how many there are out there. They're all waiting for you to call so they can find you an amazing deal!

Your home may be repossessed if you do not keep up your repayments on a mortgage or any debt secured on it.
Loans may be secured on your home or other property. Think carefully before securing other debts against your home.
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