Everyday Loans for Everyday Life

 

 

Secured loans vs. unsecured loans

Secured loans

Whether it is a mortgage of significant value to cover the purchase of a property or a small personal loan to finance a holiday, car purchase or even an unforeseen emergency, loans are there as a solution for a wide range of different money problems.

Although there are many different types of loans to suit the different financial circumstances that borrowers will find themselves in, essentially there are two main types of borrowing.

Secured loans

Taking out a secured loan means that you are basically borrowing against the value of an asset that you own. In the most common type of example, a mortgage is a secured loan because it relates to a property.

A secured loan gives the lender a legal ‘charge’ against the asset that the money is borrowed against, so in the case of a house or flat if you fail to make the repayments and clear the mortgage loan the lender can reclaim the amount outstanding from the property itself.

In a worst case scenario this can mean that you are evicted from the property, it is repossessed by the bank or building society and sold to repay the debt. Sometimes the value of the property is sold for might even be less that the amount outstanding and the borrower can lose their home and still be in debt for many thousands of pounds.

Unsecured loans

An unsecured loan doesn’t have any asset attached to it. These types of loans are given by making an assessment on your ability to repay and are usually called personal loans.

Although you will always need to prove your ability to repay any type of loan before you are accepted by a lender, there are plenty of deals offering unsecured loans for bad credit and others that even take income from benefits into account.

Of course an unsecured loan still needs to be cleared and if you fail to do so you run the risk of court action as well as long lasting damage to your credit rating.

Related Posts

Mixed news on Brits’ lending trends The latest news released by the Bank of England has revealed that net lending to Brits increased last November, despite mortgage lending remaining d...
Economic crisis leads fewer consumers to rely on c... Since the start of the recession in 2008, the number of British consumers willing to pay for their expenses with credit has decreased. More than a ...
How can I get a same day loan? Times are tough for many as the cost of living is soaring and UK households are really feeling the pinch. In addition, Christmas is fast approaching...
Managing the costs of going back to school With just a couple of weeks to go until the children go back to school, most of us are now making those necessary purchases in preparation.So as p...
Andrew Wayland on GoogleAndrew Wayland on LinkedinAndrew Wayland on TwitterAndrew Wayland on Youtube
Andrew Wayland
Marketing Director at Everyday Loans
Andrew Wayland is a financial marketing expert and helped set up Everyday Loans back in 2006. Prior to his position as Head of Marketing for Everyday Loans he worked as the Head of Commercial Development for a tech start up and ran his own PR agency for around 5 years. LinkedIn: https://www.linkedin.com/in/andrew-wayland-9018074