GUIDE TO LOANS

Looking for a loan?

Weigh up your options offer secured (homeowner loans) and unsecured loans (personal loans) online, and are experts at finding personal loans and homeowner loans that are tailored to your requirements and circumstances, in fact for many people, homeowner loans and unsecured loans are an ideal way to fund some of life's bigger expenses!

Which Loan will benefit you?

By acknowledging borrowers' circumstances, we offer a simple and effective guide which will enable you to decide which option is most appropriate for you. Ultimately, you need to decide whether you require a secured or unsecured loan; a secured loan is one which is secured against your assets i.e. your home, which could be taken from you if you fail to make repayments.

Speaking with an independent financial advisor could help you understand the pros and cons of each, and also the differing interest rates of both secured and unsecured loans. It is important to get a quote for both to ensure you are aware of the terms and to check the available rates for your current situation.

Lastly, secured and unsecured loans aid individual borrowing needs so it is essential that you research what is the best option for your circumstances. If your situation inevitably means borrowing more than £25,000, you can only do so with a secured loan.

Which will provide the best deal for you?

Which loan will offer a lower rate of interest for you can depend on your credit history. The best deal will be found by borrowing the minimum amount you require over the shortest period of time, reducing the total cost you need to repay. If however you do have a strong credit history and will be borrowing under £25,000, it is reasonable to presume that you will get an even lower rate with an unsecured loan; in these instances it is not normally advisable to choose a secured loan, even if you are a homeowner.

Similarly, it is extremely important to track the total amount repayable; for example, secured loans often offer lower rates of interest and the amount you can borrow is significantly larger, but because the borrowing takes place over an extended period of time, usually between 5 to 25 years, the total amount repayable could potentially be more. Don’t be misled when it comes to lower monthly repayments; this is due to the loan being paid over a longer period of time. Repayment insurance may also play a considerable part in increasing your total repayable amount.

Unsecured loans are typically for smaller amounts of money over a shorter timescale, thus the total loan cost is usually less. However it is essential to be aware of what competitive interest rates you qualify for and whether the monthly repayment is affordable.

Secured loans

A secured loan is a loan in which the person borrowing has guaranteed some sort of asset which acts as security for their loan. This in turn becomes a 'secured' debt which is owed to the creditor who primarily initiates the loan. In addition, this means that there is less risk for the lender as they would be able to repay any unpaid debt by taking the borrowers’ assets, if they fail to keep up repayments.

Equity means the value of your home minus the value of any mortgages/ secured loans that are against it. If the borrower decides to withdraw from such lending, the initial creditor has the right to take ownership of the asset provided for security (used as collateral) and regain a percentage of the amount that was originally lent to the borrower.

What to consider when contemplating secured loans

In many cases, consumers opt to use secured loans so that they can consolidate large amounts of unsecured debt into one loan. This can be a mistake if the consolidated loan is used as a means of spending more money, rather than reducing debt. If you borrow more than £25,000 then you must do so using a secured loan; this then has the added risk that your home will be repossessed if you do not keep up with loan repayments.

Unsecured loans

An unsecured loan is solely based upon an individual’s financial situation, taking into consideration their creditworthiness, credit history and their overall persona and reputation. Once this has been considered, the borrower signs a promissory note, but is not required to produce any collateral, hence the term ‘faith loan’( supported by the borrower themselves). It is a loan which is not evidently backed by any form of collateral such as an asset.

What to consider when contemplating unsecured loans

Firstly, if you do have a poor credit history, obtaining an unsecured loan with a reasonable rate of interest could prove to be very challenging as it coincides with the way the typical APR structure works. Lenders may require security to decrease the risk you hold as a loan candidate. If you do qualify, the interest rates proposed may be too high to be deemed as competitive. Research shows that more than 85% of prospective borrowers are refused unsecured loan applications simply on the grounds that they are not eligible to have such loans without near perfect credit ratings, therefore making secured loans the only option to borrow at reasonable rates.

Your credit ranking

Your credit rating drastically influences your loan application in whether it is successful or not. This includes looking for a personal loan, secured loan, mortgage or even just a new credit card.

What is a credit rating?

A credit rating is an overview of your current financial situation. For instance, it is information linked in conjunction with you and used by credit agencies to assess and ascertain your exact credit score. It is provided to eradicate any potential problems when dealing with issues of repayment, so the better your rating; the easier it is for you to gain borrowing from lenders.

What is a credit score?

Whilst your credit rating is held to display your financial circumstances, your credit score is a separate assessment of the risk you pose regarding credit applications. However it doesn't exist singularly and of its own accord; the information credit providers have on record will create its own independent credit score for your application based on your current finances.

What affects my credit score?

A number of personal and public matters make up your own independent credit score. The following may be implicated:

  • The length of time you have been living at your current address

  • Your personal income and the length of time of current employment

  • Whether you hold a UK bank account

  • Consulting whether you appear on the electoral register

  • The amount of recent applications for credit

  • Your amount of current debt and the management of debt repayments (paying on time every time)

  • Details of bankruptcy in the past 6 years

You should be aware of your credit score as this will affect the interest rates offered to you on loans and to the extent in which you are qualified to borrow.

Can I view my credit report?

Yes, but charges do apply Beat Your Quote have partnered with UK Credit Ratings to offer credit reports and you can access your credit report free for 7 days. Charges apply after the free period if you do not cancel, the terms and conditions can be found on the clients website. To get your 7 day free credit report click here

MISSING PAYMENTS ON A LOAN WILL HAVE SEVERE CONSEQUENCES AND MAY MAKE OBTAINING CREDIT MORE DIFFICULT IN THE FUTURE. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME: YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE, LOAN OR ANY OTHER DEBT SECURED ON IT.

Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk

Unsecured Loan

LOANS FROM £1,000 TO £15,000

  • Loans for any purpose
  • Repayment period from 12 – 60 months
  • No upfront fees
  • Home owner or tenants
  • Simple application

An unsecured loan is solely based upon an individual’s financial situation, taking into consideration their creditworthiness, credit history and their overall persona and reputation. Once this has been considered, the borrower signs a promissory note, but is not required to produce any collateral, hence the term ‘faith loan’ (supported by the borrower themselves). It is a loan which is not evidently backed by any form of collateral such as an asset.

Unsecured Loans, also known as personal loans, carry no risk of repossession because no collateral is given to the lender.

Secured Loan

LOANS FROM £7,500 - £500,000

  • Over 200 products searched
  • Repayment period from 3 – 25 years
  • No upfront fees
  • Home owner loan
  • Household brands

A secured loan is a loan in which the person borrowing has guaranteed some sort of asset which acts as security for their loan. This in turn becomes a 'secured' debt which is owed to the creditor who primarily initiates the loan. In addition, this means that there is less risk for the lender as they would be able to repay any unpaid debt by taking the borrowers’ assets, if they fail to keep up repayments.

Equity means the value of your home minus the value of any mortgages/ secured loans that are against it. If the borrower decides to withdraw from such lending, the initial creditor has the right to take ownership of the asset provided for security (used as collateral) and regain a percentage of the amount that was originally lent to the borrower.

GET STARTED...

Beat Your Quote is a trading identity of Money Media Ltd, 19 Appleton Court, Calder Park, Wakefield, WF2 7AR
Registered in England and Wales, No. 7654185
Money Media Limited is authorised and regulated by the Financial Conduct Authority (FCA) Registration number 571896