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Loans
There are many different types of loans to choose from. The following should help you decide which loan will best suit you.
Unsecured personal loan
A personal loan available from a bank, building society or other financial institution without security.
A lump sum will be loaned in return for you agreeing to make regular repayments usually by direct debit. Personal loans are available from £500 up to £25,000 (security will usually be required for loans of large amounts) and are repayable over a period of time, usually somewhere between 6 months and 10 years.
Lenders charge interest, which can either be fixed or variable, on the amount borrowed. This interest charge is expressed as an APR (annual percentage rate). The APR will vary depending upon the amount of the loan and the length of time over which the loan is to be repaid. Usually the rate is fixed for your loan repayments and will remain the same throughout the period of the loan. It may however, be variable, particularly in the case of longer term loans.
Secured personal loan
A secured personal loan is one in which some of your property (home, stocks and shares, etc) is held, by the lender, as security for the amount you have borrowed. Secured loans usually offer lower interest rates than unsecured ones.
Payment Protection Insurance
This is insurance that should cover your monthly loan repayments in the case of unemployment, accident, sickness or death. There are sometimes different levels of insurance providing different cover at each level so it is important to check the small print to make sure that the cover provided is suitable for your needs.
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