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A Short Guide To Online Unsecured And Online Secured Loans

Apr 6, 2008
Getting a loan is no longer a complicated trip to see your bank manager with a bundle of paperwork in your hand, pleading for help when you need it. Loans can be applied for online the internet, at the click of a mouse from the comfort of your own home. They are no longer available to specified groups of people, but to anyone who is able to prove that they can pay off the agreed monthly amount for a period.

Online secured loans and unsecured loans are constantly marketing their products and advertising their services on the television more so now than they were before. More people have fallen into debt and some struggle to keep up with payments. For those looking to apply for loans may find it helpful to establish the difference between the two terms before going ahead with this decision.

Unsecured loans are probably the safest loans to borrow. They are sometimes referred to or known as personal loans and people can borrow anything up to twenty five thousand pounds. However, the biggest advantage is the lender will not be able to repossess your home or your car if you are unable to pay back the amount you have borrowed.

Furthermore, the interest rate on the loan is fixed, so no matter what the changes are to the interest rate you will always pay that fixed amount every month. Therefore, you will know exactly how much to pay off each month. Unsecured loans are available from nearly all major banks and lenders online, so people can apply from their homes and with all their paperwork at the ready.

Secured loans are offered to people who want to borrow more than twenty five thousand pounds, but you will have to have it secured against your assets, most likely your house or car. This means that if you are unable to make your payments then the lender has that right to possess your home. In addition, the interest rate varies, so you will not be paying the same amount for the duration of you repayment terms. These are far more risky than unsecured loans and require a lot of consideration before application.

The loan is borrowed for a longer period, making it possible for people to opt to spread the cost of their loans. This makes the repayment more affordable; however, there is the disadvantage of having to pay a high interest rate. Online secured loans are more readily available for people to make their application more quickly and efficiently. This is usually followed by a further telephone call or appointment with an advisor to discuss your borrowing needs.

People looking to pay off their loan may consider a secured loan, but they should also consider the option of remortgaging their house before they opt for a secured loan, because some mortgage deals can offer cheaper interest rates. Generally, people looking to borrow a small amount are advised to go for the unsecured loan.

The alternative to taking out an unsecured loan would be to transfer your debts onto a credit with no interest rate. This will mean that you will have to pay off the loan for a fixed term, once that term reaches its expiry date you may face paying the normal APR on the credit card. In this instance you may need to transfer again.

The terms to look out for from lenders are typical APRS, which is normally used for credit cards. Repayment holidays, which refer to taking a break in your loan repayments at an agreed time, such as taking a break every January of every year, for the duration of your repayment period. Early repayment charges refer to people wanting to pay off their loan early but the lenders will then charge you a penalty if they find that you are suddenly able to afford the repayment.

It is always a good thing to repay your loans early, but it may be harder to find a loan that you can pay off early without incurring any charges. You should always seek professional financial advice before taking out a loan. Calculate your finances making sure you have a clear idea of how much you need to borrow and how much you can afford to pay off before making any applications. It is better to be certain than getting yourself involved in something that may affect your credit rating because you could not afford the loan repayments.
About the Author
Anna Stenning is an expert on online secured loans having researched various loan offers in the past to consolidate all her debts.
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