We explain the different loan types available...
When looking on the internet for online loans you will come across a variety of terms used by companies to describe their loans.
Some of these terms do indeed describe different loan types, but equally, different companies have different ways of describing the same thing. So on this page we'll explain the most common loan types and the various terms you may see that describe them. Then hopefully you'll know what you are looking for and can apply with confidence.
Personal Loans
This is a generic term used to describe loans that are made to individuals as opposed to companies or businesses. Sometimes the term is used to indicate the purpose for which the borrowed money will be used - ie for personal use in this case. Other terms may describe more specifically the purpose that the loan is intended to be used - for example car loans, consolidation loans or home improvement loans. Personal loans can vary in size from just a few hundred pounds up to several thousand pounds. Also they are typically taken out on an unsecured basis - by that we mean the lender does not require any specific security for the loan. This is different to higher value loans or loans where the borrower may have a less than ideal credit history, where the loan will only be approved if some security or collateral is provided.
Unsecured Loans
As we have just said, loans can be broken down into two main types - those requiring some specific security, namely secured loans - we'll look at the these below and unsecured loans where no upfront security is required. Lenders tend to approve loans on an unsecured basis if the amounts are smaller, the terms are shorter, the borrower has a good credit record or they can charge higher rates of interest in order to offset the loans that may default in the future.
Car Loans
Any of the loans we provide can be used to pay for a car purchase. We don't provide some specific car finance options like leasing plans and personal contract hire arrangements directly, but the flexibilty provided by a more general loan is often appreciated by car buyers. For more information about borrowing money to pay for a car visit our car loans page.
Secured Loans
Secured Loans are usually only available to homeowners with enough equity in their property to cover the value of the loan. Some lenders will consider lending up to 125% of equity in certain cases. Because of the security a lender can feel more confident that they will be able to recover their money if the borrower has any difficulty in repaying the loan and for that reason secured loans are often available for larger amounts and often attract lower rates of interest. They can usually be repaid over a longer time period, therefore keeping the monthly repayment figures lower.
