Should I choose a secured or unsecured loan?

Should I choose a secured or unsecured loan?

Types of secured loan

Homeowner : These loans are secured against your property and are often for larger sums over ?25,000, although you can borrow as little as ?7,500. They can last for anywhere from 3 to 25 years.

Logbook: These loans are secured against your vehicle and the money you borrow can be used for any purpose. You may be able to borrow 50% or more of your vehicle’s value. They can usually be taken out for up to five years. Logbook loans tend to have relatively high interest rates.

Vehicle finance : These loans are secured against the vehicle you buy using a finance agreement. Once you have made the final payment you will own the vehicle. The loan could last for one to five years.

Bridging : These loans are usually secured against your property and are normally large loans to bridge the gap before other finance is available – for example, if you need to buy a new home before your current one is sold. They tend to have higher interest rates than other types of loan but are designed to be taken out over short periods, which could be as short as a day although 12 months is common. You’ll need an exit strategy for how you intend to pay off the loan when you take one out.

Debt consolidation : Secured loans can often be used for debt consolidation. The loan is secured against your property, or sometimes other assets, to pay off existing debts with the aim of reducing your monthly repayments.

Types of unsecured loan

Personal : These loans let you borrow a cash lump sum and pay the money back over an agreed amount of time.

Guarantor : These loans allow you to borrow money with the help of a friend or family member who guarantees to pay back the loan if you can’t. Leia mais

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