Loans Definition

A brief explaination of different loan types

 

Secured Loans 

A secured loan is a loan secured against equity that you put forward, which in most cases would be your property.  The lender would place a charge on your property or hold your deeds and has the right to reclaim their money by sale of this equity should repayments not be met. This means the risk to the lender is minimal and they are normally able to offer a lower APR (Annual Percentage Rate) meaning the loan would be cheaper and you will pay less back overall.

 

 

Unsecured Loan 

An unsecured loan is a loan that does not require you to provide any security. This is a higher risk to the lender than a secured loan so the lender will take out insurance policies to cover them against the money they have lent. The cost of this is passed on to you and means you will normally receive a higher APR (Annual Percentage Rate). If you are not a homeowner, and do not have any assets to offer as security, then an unsecured loan is the only option available to you.

 

 

Debt Consolidation Loans 

Debt consolidation is the grouping of all or some of outstanding debts into one more affordable loan. For example, if you have a credit card debt of £3000, a store card of £500 and an existing loan of £5500, these could all be consolidated into one loan with a lower interest rate and/or lower monthly repayments by increasing the repayment term and/or lowering the overall interest rate.

Quite often some or all of your debts are based on uncompetitive interest rates especially when borrowing on store cards or car finance. A more competitive loan from us can be used to repay all of your debts, leaving you with one lower more affordable payment. Changing those high-interest rate loans to a more competitive rate is where consolidation could save you money.

You don't have to wait until you are struggling with your payments to consolidate your debts. You can benefit from a consolidation loan even if you are meeting your existing payment agreements giving you more money to save or spend on other luxuries.