Personal Loans

Personal loans can be either secured or unsecured. Compared with some types of borrowing, like credit cards and bank overdrafts, personal loans may be better if you are looking at fairly large amounts over more than just a few years, or if you prefer making repayments with fixed amounts on a regular basis (unlike credit card repayments). How suitable this type of borrowing is depends on its cost or APR and how much you can repay each month.

In general most personal loans are not secured and this type of borrowing will usually cost more than secured loans. Because there is no charge on your home (it is not used as security for the loan) the lender's risk is increased and you may be offered less money over a shorter term (period of the loan). The obvious benefit of not having a charge on your property is that you will not be risking your home if you are not able to meet repayments, but lenders will pursue debts for payment defaults. If the lender has a charge on your property than you will generally be offered a lower-cost personal loan. The risk to you is the possible sale of your home if you cannot meet repayments. The lending limit will usually be higher and the term can also be longer. With so many competing lenders you can get good deals.