Most people at one time or another will need the help of a loan, perhaps to make a major purchase like a car or a once-in-a-lifetime vacation, or perhaps even to get through an emergency financial situation that has arisen. However, there are many different types of loans available and they can be quite different in the way they work. Some are better suited to get you through a short-term financial emergency, while others are better suited for other purposes. This article will discuss some of the most popular types of loans available and what they are best used for in order of popularity.
payday loans– This type of loan is a short-term emergency loan available for amounts up to £1000. They are called payday loans because the loan is gulled back on your next payday. This is by far the most popular type of loan available today with millions of people turning to it to overcome short-term financial problems. The main reason for their growing popularity is the fact that they are quick and easy to set up (usually paid the same day you apply) and are also very easy to understand, making them an ideal solution when you need quick cash for whatever. reason. Plus, because lenders charge a flat fee (usually around 20%), you know exactly how much the loan will cost up front, and because you pay the loan off in full on your next payday, you don’t have a impact on your financial situation in the long term.
Guaranteed loans: This type of loan is also becoming more popular because it is designed to help those without perfect credit arrange the financing they need. As such, it can be a useful tool in improving your credit rating as long as you maintain regular payments. They are available for amounts up to £5,000 and for terms of up to 5 years, depending on the size of the loan. Lenders don’t require a credit check of the applicant in the underwriting process, and as long as you’re not in an IVA (Individual Voluntary Arrangement) or bankrupt, anything else isn’t really an issue. Lenders can offer this type of loan because repayments are guaranteed by a guarantor (cosigner). The guarantor will need to be a financially stable homeowner, with an income of £800 or more between the ages of 23 and 70. They can be used for any purpose and open up the financial market for those who might not otherwise be able to obtain a loan.
secured loans– With this type of loan, the lender will require some form of collateral, usually in the form of a second charge on your home, however there are also lenders who will accept your car as collateral (logbook loans). This type of loan can be arranged for larger loan amounts of up to £100,000 and for terms of up to 25 years. As such, they are often used to consolidate more expensive loans and credit card balances into a cheaper debt consolidation loan, or to finance home improvements. They are usually offered at lower rates since the lender has collateral to fall back on in case of default.