Secured and Unsecured Loans in the UK
One of the important characteristics of human beings is their survival instinct. We face many problems day in and day out, but we have the ability to see opportunities in these problems. Problems and opportunities are two sides of the same coin. When there is an imbalance between our earnings and expenses, one of the options available to us is to go in for loans.
It is not always the people who have financial problems who go in for loans. People who want to expand their dwellings, or who want to live a sensational and adventurous life by traveling far and wide, and even those who just want to consolidate their liabilities, all look for loans.
Secured and unsecured loans are the two types of loans available in UK. In secured loans, the lender insists that the borrower give as a collateral any of their assets, namely their home, their car, stocks, or any other asset of high value. If the borrower fails in repayment, the lender will recover the dues by selling the asset thus given as collateral.
Advantages of a secured loan are that the money lent is usually more than in the case of an unsecured loan. Also, the repayment period is longer. The lender also feels safe as the loan has the back-up of an asset. Therefore the interest rates are also comparatively cheaper. Even if the borrower has a weak credit history, a secured loan may be considered since it has the back-up of an asset.
No asset need be given as a collateral in the case of unsecured loan. Money is lent on the basis of the credit-worthiness of the borrower, their track record in repaying previous other loans, etc. Once this is ascertained, the lender decides the amount that can be lent, the rate of interest to be charged and the repayment period. Usually the amount lent in unsecured loan is relatively small, the rate of interest charged is high, and the repayment period is shorter than that of a secured loan. A guarantor may be required to sign the papers along with the borrower so that the lender can recover the dues from the guarantor if the borrower fails in his repayment.
The advantages of an unsecured loan are that since no collateral is involved, there is no question of the borrower losing the asset. The borrower need not possess any asset to get the loan, and since the repayment period is relatively short - they can quickly get rid of the burden of the loan if they plans their finances properly and repay the loan comfortably.
Some people borrow money for their business or for expanding their businesses. Whatever may be the purpose, keep in mind that it is only a temporary arrangement. People should not become habitual borrowers because once if they get into this web, it will be very difficult for them to get out.
Usually lenders are very strict and they will be obstinate in insisting on timely repayments. Hence, one should think of loans only as the last alternative. If such a situation arises, there should be concrete plans for repaying the loan on time. - 23212
It is not always the people who have financial problems who go in for loans. People who want to expand their dwellings, or who want to live a sensational and adventurous life by traveling far and wide, and even those who just want to consolidate their liabilities, all look for loans.
Secured and unsecured loans are the two types of loans available in UK. In secured loans, the lender insists that the borrower give as a collateral any of their assets, namely their home, their car, stocks, or any other asset of high value. If the borrower fails in repayment, the lender will recover the dues by selling the asset thus given as collateral.
Advantages of a secured loan are that the money lent is usually more than in the case of an unsecured loan. Also, the repayment period is longer. The lender also feels safe as the loan has the back-up of an asset. Therefore the interest rates are also comparatively cheaper. Even if the borrower has a weak credit history, a secured loan may be considered since it has the back-up of an asset.
No asset need be given as a collateral in the case of unsecured loan. Money is lent on the basis of the credit-worthiness of the borrower, their track record in repaying previous other loans, etc. Once this is ascertained, the lender decides the amount that can be lent, the rate of interest to be charged and the repayment period. Usually the amount lent in unsecured loan is relatively small, the rate of interest charged is high, and the repayment period is shorter than that of a secured loan. A guarantor may be required to sign the papers along with the borrower so that the lender can recover the dues from the guarantor if the borrower fails in his repayment.
The advantages of an unsecured loan are that since no collateral is involved, there is no question of the borrower losing the asset. The borrower need not possess any asset to get the loan, and since the repayment period is relatively short - they can quickly get rid of the burden of the loan if they plans their finances properly and repay the loan comfortably.
Some people borrow money for their business or for expanding their businesses. Whatever may be the purpose, keep in mind that it is only a temporary arrangement. People should not become habitual borrowers because once if they get into this web, it will be very difficult for them to get out.
Usually lenders are very strict and they will be obstinate in insisting on timely repayments. Hence, one should think of loans only as the last alternative. If such a situation arises, there should be concrete plans for repaying the loan on time. - 23212
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posted by X - Men @ 2:48 AM
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