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Personal Loans Uk

UK Personal Loans:

There are various reasons why people want to take a loan. It could be to purchase a new car, fridge, to pay college fees, for house improvement or simply to repay a debt. Whatever be the reason the simple solution to financial crunch are personal loans. You can use the money to go on a holiday or buy desired things or clear all debts and replace with one low monthly payment. The loan has to suit individuals according to their requirements. It is like a suit which has to fit in all the right places. Hence is vital that you must shop for the best which will suit your needs and resourses.

UK Unsecured loan:

An unsecured loan is a personal loan where the borrower is not required to offer any collateral to back the loan. It is best for those who do not own their own house. Since their loan is not secured against any of their property or asset the lender will be financing at great risk and hence the rate of interest will be high. However, people in a hurry will find this handy. It can be used for a holiday, surgery, a new car, education or home improvements.

Unsecured loan has its own advantages:

• An unsecured loan application is processed faster ,as there is no need to asses your home or property.

• As the lending rate is high the success rate for unsecured loans is higher.

• You need not use your assets or home ,as security. Evidently this makes the loan safer for you.

Unsecured Loan has its disadvantages too! If you fall into financiacial problems and are not able to pay back the borrowed money or instalaments you may have to face great difficulties.The lender will have no patience with you as he does not have any collateral he can fall upon.You may even have to face court proceedings.He may reclaim his money from your prized assets.

UK Secured Loans:

In Secured loan the borrower is required to offer collateral so that the loan company can have some insurance for their capital.

The loans are usually for large amount than any unsecured loan. The uses maybe for various purposes such as for home improvements,buying a car,weddings, dream holidays,or cleareance of debt.Since the lending is for a large amount the provider is at risky proposition.Therefore the loan company must have some insurance for their capital.

Secured loans are the most secure and easy ways of borrowing money. Nevertheless ,it is mandatory that the borrower own a house or property.You can borrow between 5,000 up to 500,000 . However the largest amount are generally for 75,000.The maximum amount depends upon your income combined with the amount of equity in your property.Equity is the market value of your propery minus any outstanding loans or mortage you may have.

Secured loans have great advantages:

• The money can be repayed in easy monthly instalaments.Typical rate 10.9% and lowest rate being7.7%.

• The duration of repayment can be for longer period, typically 3 to 25 years.

• Since the loan is secured on your home or property, the lender may agree for a larger amount.

• Homeowners have great chance of their application being accepted.

• Any improvements of the house will raise the value of the house. The lender will view this type of lending safer.

Secured Loans have one major disadvantage.Your house is at risk if you fail to repay the money.Incase you are unable to pay back the money the lender has collateral in your house! Hence continous failure to pay the loan repayments could result in the lender taking legal possession of your home.

Guide to the best UK personal loans:

In UK there are about 70 types of lenders offering personal loans. These include the traditional high street banks and building societies to online banks and supermarkets.

High street banks and building societies : This traditional way of borrowing is fine for those who wish to go for familiar brands.

These banks usually have branches in every towns.Hence you could drop in their office and chat with your lender. However these banks charge a little higher interest than online banks.

Supermarkets, shops and post offices:

UK supermarkets, shops, and post offices too offer loans. Of late this has become quite popular as you can take in personal loans together with your other purchases.

Online banks:

This is a very conveinent form of banking.You can phone the providers and discuss your problems .Their interest rates are much lower than other lenders.Another advantage is that you need not be in UK to handle your loan.

Borrowing and lending exchanges:

Borrowing and lending exchanges work like cooperatives .There are no middlemen and extra costs which make high street banks expensive. Therefore they offer personal loans at low interest.The process of borrowing and lending is simple and quick. People lend and borrow from one another directly and enter into legal contract with their respective borrowers and lenders.Incase of non payment of monthly repayments the process of recovery is the same as that of high street banks.

Personal loan guide

The competition in the market place is quite high. This has led to a seeming fall in loan interest rates.But lenders can be tricky.To make a big profit they may often provide hidden charges.Eventually you may end up paying more then your expectation.

Typical APR-

You must be wary of the APR (Annual Percentage Rate). Typical APR is the main interest rate figures the lenders mention when advertising.Often lenders can mislead people with a tricky APR. They may quote an APR,which is the sum the loan will end up including the the interest and charges. But in reality you may end up paying more than the rate.

Penalty for Early Payment-

You could be penalized for an early payment of your loan. This sum could be the equivalent to one or two months interest. The earlier you pay the higher the charge!

But some bankers have scrapped this penalty.


If you are intimidated about repayment should you lose your job or have financial problems,the solution is to go for Payment Protection Insurance (PPI). While PPI can give peace of mind,it has its drawbacks.

It can be an expensive option.Often providers include the full cost of the insurance with the personal loans at the beginning .This means the customer has to pay interest for both the cover and loan.Adding PPI can at times double the actual cost of the loan.

You may not be eligible for payments for a period upto six months after starting insurance.

Independent organisations offer cover at reduced premiums. Hence it would be beneficial to scout for such organisations.

You must be ready to choose your own personal loan. Opt for a simple,safe and easy one.

Related Topics

UK secured loans
UKs cheapest personal loans
Homeowner loan
Payment Protection Insurance (PPI)

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