Different Needs Mean Different Loans
Ever since the late 1990s, the loan market has expanded rapidly with credit becoming easily available. As well as the market size increasing, however, so has the number of options available and this has made the market incredibly confusing. Here’s our handy guide to the types of loan available so that you can make sure you’re getting the best deal:
Unsecured Personal Loans
Personal loans are offered widely and they can cover any expense. Personal loans are generally unsecured for amounts of up to a thousand pounds.
Unsecured loans are generally approved or declined in the same day and applications are generally short. Due to their unsecured nature, however, interest rates are often incredibly high and, as a result, they should only be used for a very short period.
For this reason, an unsecured personal loan is best for people who want to borrow a small amount over a short time period.
A home-equity loan allows you to borrow against the value of your home. You can easily work out the amount you’d be able to borrow with a home equity loan by working out the difference between the market value of your home and the amount you still owe on your mortgage.
These loans are often taken out to cover large debts such as debt consolidation or home additions or extensions. Due to the size of the loan, they’re also long term and are generally taken out over 15-20 years.
Always remember, however, that you’re borrowing against your home and, although large amounts are available to borrow, you could potentially lose your home if you’re unable to repay.
Small Business Loans
Small business loans are available for entrepreneurs who want to set up their own business. You’ll need to supply a solid business plan and you usually need somebody else such as a family member to guarantee the loan in case the business fails. The amount on offer varies and nowadays there are also government schemes that can help.
If you want to set up a business then this is the perfect loan for you and the loan amounts range from a couple of thousand pounds to tens of thousands of pounds.
Career Development Loans
Career development loans are available to people who want to go back to university to further their education. If you’ve already done an undergraduate degree but want to study for postgraduate education then this is the perfect loan for you. Widely available, you don’t need to pay interest while you study and you have three months after the course to start making any repayments. This means you can relax and focus on your studies.
There are hundreds of different loan types available, so before you take one out make sure that you can compare every option to see what’s right for you.