Available loan options in the UK | Pick the best suited for you

Posted

What are short-term and Long-term loans?


This is classification of loans on the basis of repayment time period. Loan for few weeks to one year are termed as short-term loans. Payday loans Direct Lenders, text loans for bad credit, high cost loans are some examples of short-term loans. Generally no guarantors are required for these loans so sometimes also called as no guarantor loans.
Loan term for 12 months to few years comes under group of long term loans. They are backed by some security and belongs a group of cheap loans. Home buying loan, consumer goods loan, personal loans are some example of long-term loans.

What are Secured and unsecured loans?


We may divide loans in to two categories on the basis of non-repayment risk from a lenders point of view
1. Secured loans: These loans are accepted by the lender after putting any valuable asset like your home or car as collateral. In this case the lender will have nothing to lose if you do not repay the loan; he will recover through sale or your asset. Here you will be the face a huge loss due to loan default.
The lender easily approve these loans, the best part of these loans is they are long-term loans and cheaper in comparison to unsecured loans.
The personal loans, housing loan and car finance are some example of secured loans.
2. Unsecured loans: Here loans are approved for the short duration purely on the basis of affordability of loan, means lender will check your financial status for assessment of timely repayment.
In case of any non-repayment of loan the lender has limited options to recover the loan because short-term loan regulator in the UK, has made very strict rule for charges and penalty of loan default.
Payday loans, text loans, instalment loans, bad credit loans are some example of unsecured loan.

How many Instalment I can repay loan?


Basically instalment loans are long-term loans where principal amount plus interest is repayable in instalments of equal amount per month. These are suitable for higher amount.
For short-term loans like payday loans some lenders approve loan repayment in 3-4 instalments as well.

What are payday loans?


Payday loans are short-term and unsecured loans charged with high interest rates. These loans are good option for temporary and urgent funding only otherwise these costly loans should be avoided.

What are Text Loans?


Many old and new lenders in the UK give special consideration to their loyal and trusted customers in loan application and approval process. These repeated loan customers can apply for fund by simply sending a text message. The lender will fetch the record of the applicant from their database and may approve the loan after basic checks.
This is time saver as well as opportunity for High Acceptance Loans from the direct lenders because you are not new to the lender.

Which is the best Personal loan or payday loan?


Depending on your need both are useful, if you are in need of big amount and wanted to repay in many instalment of small amount then personal loans are the best.
For mini loans of shorter duration payday loans are good option.

What are direct lenders loan?


In any case loan is financed by a direct lender only but there are many agents of these lenders in the market, who pose as lender themselves and making fake promises like “no credit check loans by direct lenders”, “Instant approval loans”, “guaranteed loans”.
The agents of direct lenders are called a broker, they collect your data when you trapped by their catchy advertisement and fill the form with their websites. Now they will sell your details to most reward paying direct lender, till they find the suitable buyer lender they keep you waiting.
This is the reason every loan seeker is trying to connect the lender directly.

What is Bad credit loan?


There is no such loan which is specially made for bad credit applicants, but you have some options in getting loans even with your poor credit. If you can arrange a person as your co-applicant for loan who has good credit score then your application will be treated as normal. Other option for you for loan approval is that you can prove your loan affordability or repaying capacity of applying loan.

What are No Credit Check Loans?


Secured loans were risk is protected by some assets as collateral; the credit check has lesser importance. But for unsecured loans which are approved for shorter term, the credit check is always imperative for assessment of risk by the lender. “No credit check loans” are not available for payday loans.

What are Guarantor loans?


For bad credit loan applicant some lenders required a second person to sign loan deal with the applicant as a co-applicant is called guarantor. The guarantor should have good credit score to cover up poor credit of original borrower. If the borrower fails to repay loan in predefined time frame then the guarantor has to repay the loan.

How to get cheap loans?


Long-term secured loans are cheaper in comparison to short-term unsecured loans. The interest charged by the lender has two components, one for the normal interest rate and other for risk of non-repayment. In unsecured loans the risk component is very big so their cost is very high, for secured loans the risk component is negligible, so they are sometimes called as cheap loans.

What is Debt consolidation loan?


One single loan that you can use to repay all other outstanding loans is called consolidation loan. If you have much short term high cost loans, then you can repay all of them by taking one long term secured loan on cheap rate. This loan will be a consolidation loan for you.

What are fixed rate loans?


From the angle of interest rates the loan may be of two types, fixed rate loan where interest rates are same for full loan term. The second type of loan is variable or floating interest rate loan, here interest rates are fixed for first one or two years then they vary as per central bank’s interest rate.

Author