Borrowing money is a part of everyday life, individuals do it, companies do it and governments do it.
Why a loan?
For individuals, a personal loan can be used for a host of different reasons:
- A special occasion like a wedding or a holiday
- Large purchases like a car or home improvements
- Unexpected expenses, or
- If you want to simplify your finances by consolidating
Personal loans can be used for a variety of values and repaid over a range of terms that suit you. You borrow a fixed amount and repay it over a fixed period.
What type of loan?
There are 2 category of loan available, unsecured and secured.
- An unsecured loan tends to be for smaller values over shorter repayment terms – often used for car, holiday or finance consolidation
- A secured loan or 2nd charge mortgage is secured against the equity of the value of your property. This potentially allows greater borrowing for longer periods – often used for home improvements and finance consolidation.
Things to think about…
- When you borrow, it is important to think about your ability to repay the loan now and in the future. Your circumstances may change in the future so make sure you do not put unnecessary pressure on your resources. So, think about your future circumstances when considering your borrowing plans.
- Interest rates can vary dependent on the lender, the value of the loan and the repayment term. APR’s are used as a way of comparing borrowing facilities against each other.