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Personal Loans Uk
By: Matthew Bourne
The UK is a nation of debtors. It is estimated that 15 million people in the UK
are struggling with personal debt, while in 2004 some 46,000 people filed for
bankruptcy with personal debts running at an average of more than £50,000.
Despite these figures though, we continue to borrow on loans and finance
agreements, mainly because it is still very cheap to do so.
Competitive personal loans rates
With the Internet making personal loans more accessible it is now easier than
ever to apply for a personal loan. Just a quick glance online reveals that
adverts for personal loans are everywhere. In fact, the competition between
lenders is so fierce that many personal loans now come with added benefits such
as discounted interest rates, air miles and even free insurance products to
entice customers to choose a particular loan.
Loans companies too are relaxing their lending criteria, opening up personal
loans to people who they may not have been willing to consider some five or ten
years ago. Adding to the incentives for the borrower to apply for loans is the
fact that the base interest rate has maintained a relatively steady course over
the past few years, and looks set not to increase dramatically over the next
year or so either. All in all, this combination of factors has fuelled the
personal loans market, pushing the nation's total debt past the £1 trillion mark
for the first time in history.
Choices in the personal loans market
When taking out a personal loan, borrowers are confronted with a plethora of
offers from lenders. These personal loan offers are essentially divided into two
categories - unsecured loans and secured loans.
Unsecured personal loan products are available to homeowners, tenants, and
people living with their parents. The borrower can normally apply for loans of
between £1000 and £25000 without the need to commit to any collateral on the
loan. Fixed interest rates from as low as 5.7% are currently available on some
loans, however the rate is normally subject to a high credit score. For people
with a less than ideal credit score, a higher APR than advertised may be offered
on the personal loan.
Secured personal loan products on the other hand are more in the domain of the
homeowner. This is because collateral is required against the personal loan, so
should the borrower default on the personal loan repayments then the lender can
repossess the borrower's home to recoup their losses. Secured loans of up to
£100,000 are available from many lenders, the limit on how much can be borrowed
being dictated by the equity in the homeowner's property. Overall, secured loans
have lower interest rates than unsecured loans.
Whichever type of personal loan you decide upon, you must be confident in your
ability to pay back the loan. If you are unable to meet your personal loan
repayments then you will attract a bad credit rating making it very expensive
for you to obtain credit in the future. If you are a homeowner, you could also
lose your home.
About the Author:
Matthew Bourne has been working in the loans, mortgage and life insurance
industry for over 10yrs and is currently working for 1Track Personal Loans
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