Three Major Loans and Their Different Uses

Much like there are lots of different insurance policies for some of the strangest things imaginable, there are also numerous types of loans available. For anyone looking to take out a loan it can be overwhelming searching through and getting your head around the different types on offer, the different lenders and the different levels of interest.

To discover the ideal loan for you, your specific needs and based on your situation, it is easiest to understand three of the most common types on offer and what they provide.

Secured Loan

Secured loans require the borrower to offer their home as security and are therefore often referred to as homeowner loans. This type of loan usually allows the borrower to take out much higher amounts over a longer period of time compared to its unsecured alternative.

Due to offering higher amounts, secured loans can be used for a range of specialised applications such as a loft conversion, a new bathroom or a major home improvement project. A company like Nemo Personal Finance provide these specialised loans and also provide secured loans to consolidate existing debt. A secured loan from Nemo allows borrowers to put all their owed credit into one place, making it easier to keep track of repayments. Remember, a loan from Nemo is secured against your home so you must be able to afford the repayments. Please be aware that the APR on your new loan with Nemo may be higher than the APR on the credit you are settling and may cost more over the course of the loan.

Unsecured Loan

Also known as a personal loan, an unsecured loan doesn’t require the borrower to be a homeowner but may require a good credit rating. An unsecured personal loan lends a smaller amount over a shorter term compared to its secured alternative, so depending on your plans for the money this may be a better option for you and your circumstances. However, the money borrowed can be used for almost any purpose but generally a higher interest rate applies due to the unsecured nature of the loan.

Payday Loan

Payday loans offer a small amount of money to help the borrower out over a short period. They are designed to help them get by until their next payday and when used sensibly and repaid quickly can assist users in unexpected bills or other expenses. However, they often come with extremely high interest rates that can soon become larger than the original loan if the borrower struggles to repay it. There are other alternatives available such as a credit card or overdraft facility but on the whole it’s advisable to avoid a payday loan at all costs.

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  1. Pingback: Immense Business Benefits Of Online Loans For Bad Credit - Enterprise Podcast Network - EPN

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