Personal Loans - a Summation of the Most Popular Loan Category

By: bernard john

Over the years there has been a major shift in the reasons for taking credit... Gone are the days when loans were availed for crucial reasons alone. Today people take credit for convenience and indulgence too. Presently, some of the most common reasons for availing credit assistance are:

Regular - house improvement, business expansion, vacation or holiday season expenses, wedding purpose, car purchase, etc.

Urgent - operation, extended treatments, late education fees, debt consolidation, etc.

Luxuries - spa treatment, cosmetic surgery, flying lessons, gambling, etc.

For most of the above-stated reasons, one can find a suitable credit solution under the personal loan category - both in secured (availed by pledging collateral) and unsecured (availed without pledging collateral) form.

Secured personal loans have the following advantages and disadvantage:
Merits are quick attention, high credit range (typically between ?5,000 and 250,000), low interest rates (typically between 6.7% and 19.9%), multiple rate plans, different repayment methods, and negotiable loan clauses Shortcomings are credit for homeowners and property owners only, slow approval procedure due to property evaluation process, and repossession threat in case the borrower fails to payback Unsecured personal loans have the following advantages and disadvantages:

Merits are no collateral compulsion, credit for all (tenants, students, homeowners and property owners), no time-consuming property evaluation procedure, less paperwork, quick service and no repossession threat.

Shortcomings are limited credit range (typically between ?500 and 25,000), high interest rates (typically between 7.9% and 41%), fixed rate plan and payback option, and non-negotiable loan terms and conditions

Though secured and unsecured personal loans are poles apart, the basic eligibility criteria's are similar. UK residents over 18 years of age can apply for these loans - subject to their credit history, employment status, debt to income ratio (DTI = Debts/Income) and the value of the pledged collateral (applicable for secured deals only).

Applicants with good or average credit record have an obvious advantage. However, bad credit holders too can avail credit assistance under the 'bad credit personal loans' category. Available in both secured and unsecured form, this particular category gives them a chance to fix their finances and improve their credit record for the future.

Personal Loans
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