No matter how carefully you manage your money, it’s important to remember that we all need a little help with our finances from time to time. Whether you need support paying for a new house for your family to live in, or you’re looking for something more short-term, the good news is that there are plenty of opportunities out there for customers in need of credit.
Here, we’ll look at 10 loan types that you can consider if you live in the UK, and you’re searching for a solution to give you extra cash.
An unsecured loan is a personal loan that’s not connected directly to any assets in your portfolio. Instead of working out what you can borrow based on the price of your home or the other item you’re putting up as “security”, lenders of unsecured loans give you money based on your credit score, and how much of a “risk” you are financially.
Secured loans are a slightly riskier form of loan for the lender, because they ask you to put your property up as security, in case you can’t afford to make repayments. If you can’t make the repayments on time, then there’s a chance that your lender will repossess your home or property so that they can make back some of the money they’ve lost.
Payday loans are a strategy for short-term lending intended to help you make payments before your next set of wages come through. Generally, payday loans only last for a very short amount of time, and the amount you’ll be able to borrow will differ depending on the lender you choose. Interest on payday loans can be higher than what you might pay for a standard short-term or personal loan.
Personal loans are simply an amount of money you can borrow from a bank or building society to put towards just about any purchase you like. You can use a personal loan to pay for a vacation or to make improvements on your home. The nature of your personal loan will depend on the terms you agree to with your lender.
Lines of credit are flexible accounts that provide you with access to finance for up to a year. However, some lenders cap the term of a credit line in just a few months. These accounts are a unique solution for lending, though they share many traits with your standard credit cards, and overdrafts. There will be a pre-agreed limit on your credit line, and you’ll have to pay a penalty if you go over that amount.
A logbook loan is a specific type of secured loan, which takes place when a vehicle is offered as collateral against the debt you’re incurring. Your logbook loan lender will have complete ownership of your vehicle until you’ve repaid the money you owe. However, the vehicle will be “loaned” back to you while you’re making your repayments.
A guarantor loan is a loan that involves a third-party, hopefully with a good credit score. Guarantor loans are most common with secured loans like mortgages, where the lender needs more reassurance that you’ll be able to make your repayments. If you can’t afford to pay for your loan, your lender will expect your guarantor to hand over the money instead.
Loans designed for peer-to-peer circumstances are a newer form of lending. As the name might suggest, the system involves borrowing money from a “peer” rather than a bank or building society. In peer-to-peer loans, money is lent between small businesses and individuals, rather than traditional financial institutions and consumers. Most of these loans are internet based.
What are Business Loans?
Business loans are usually intended to give small companies the startup capital they need to launch their company and start trading. Business loans are often quite flexible and can include amounts as low as a few hundred pounds, to as high as several thousand pounds. Under certain arrangements, the individual business owner might be able to take out a loan on an unsecured basis. However, most business lending is “secured”.
Debt Consolidation Loans
Finally, debt consolidation loans are a form of personal loan designed specifically to help you pay off your existing debt. Debt consolidation can make it easier to reduce your monthly outgoings and making dealing with debt much cheaper. Before you take out a debt consolidation loan, it’s worth working out the cost of your borrowing, vs the cost of consolidating your debts.