With so many loans and loan companies on the market to choose
from it makes sense to compare personal loans. You have a number
of options available to you form our leading lenders and your
choice will depend on whether or not you are a homeowner, your
circumstances and loan preferences.
When you compare personal loans which are secured to those which
are not, there are a number of important differences. Secured
loans require the borrower to provide the lender with collateral
or security to back the loan, and this will be their home or
property. Unsecured loans do not have this requirement. Because
the lending company is taking a relatively low risk with your
home acting as insurance against your failure to repay the loan,
interest rates on secured loans are lower than for unsecured
loans. It is wise to make sure that you can afford the
repayments on a loan before you commit to an agreement as you
will be placing your home at risk of repossession if you fail to
repay the debt. Even in the case of unsecured loans, lenders
have been known to act aggressively in order to protect their
investment and will take defaulters to court if necessary. Apart
from the differences in interest rate and risk you'll find that
when you compare personal loans which are secured and unsecured,
secured loans are approved faster than unsecured loans but will
take longer to be processed. This means that you will wait a
little longer for your money to come available with a secured
loan but it will be well worth the wait when you are ultimately
saving money on the interest rate.
Personal loans are available for various amounts and repayment
terms and are repayable on a monthly basis. You will be charged
interest by the lender and this is known as the APR or Annual
Percentage Rate. When you compare personal loans, looking at the
APRs is a good indication of just how competitive they are.
Lending companies advertise typical interest rates but these are
merely indication rates of what you are likely to be offered.
The interest rate you are given is determined taking a number of
factors into consideration, including the amount you are
borrowing, the length of time you will take to pay back the loan
and your personal circumstances and credit history. You will
also notice that lenders refer to fixed and variable interest
rates. If you compare personal loans with a fixed rate to loans
with a variable rate there is one major difference. A fixed rate
means that the amount of your monthly repayment is fixed for the
entire term of the loan which makes it easier to budget as you
know exactly how much you'll be paying each month. With a
variable rate your monthly repayments could go up and down along
with fluctuations in the bank base rate. This gives you the
flexibility to save money if the interest rate drops but your
loan could also end up costing you more if the rate goes up.
A further consideration when you compare personal loans is to
check the redemption penalty policy of the lending company. Some
companies charge up to two months interest if you pay your debt
in full earlier than agreed at the outset. If you think that you
may want the option of settling your debt before the due date
than it may be worth your while taking a loan with a slightly
higher APR but with no redemption penalty.
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