When people look to take out loans, the terminology can easily confuse. Loans can be short-term, personal, unsecured, flexible, payday and more. But what does it all mean? We took a look at one term that is a catch-all for most loans that individuals take out. Here are personal loans explained.
Between a personal loan and a secured loan, there is one major distinction. That is, personal loans do not put any of your possessions (such as a car, a house, or other higher-value assets) at danger.
With a secured loan, you can provide the lender some peace of mind by securing an asset against the loan. This means that if you don’t pay back the loan, the lender will seize possession of the item. Borrowers generally utilise secured loans for high-value transactions. This is because the lender stands to lose more money if the deal fails. Because of the increased security of a secured loan, it is often possible to get a lower APR than with a personal loan.
Personal loans do not need you to put up any collateral. As a result, the lender takes on additional risk because they stand to lose money if the loan is not paid. We deal with lenders who offer personal loans ranging from £500 to £5000 at Moolr. The repayment terms available range from three to sixty months. This gives you plenty of time to plan for your personal loan.
Lenders no longer reserve personal loans reserved for those of us who are fortunate enough to have a decent credit score. Everyone deserves a chance to repair their credit. However, finding a lender who is ready to help might be tough.
This is why we’ve spent years developing a system that makes obtaining personal loans for those with negative credit straightforward and quick. When looking for a bad credit personal loan, it’s crucial to think about the APR you’re being provided. Bad credit personal loans may have a higher APR. This is similar to why a secured loan may have a lower APR due to the lower risk. This is due to risk analysis, which should be used by any responsible lender.
Personal loan providers should follow a responsible lending policy. This means they should not give a personal loan if the risk analysis is too high. If the risk analysis determines that there is a higher risk of non-repayment on a negative credit personal loan, but it is still within a reasonable range, a personal loan offer might be made. Terms will differ however. Lenders will offer a higher APR than usual. This will be made obvious when we lead you to your lender’s website’s no-obligation personal loan offer page.
Keep in mind that all loan APRs advertised are’representative,’ indicating that not all successful applicants will be granted that rate. At least 51% of borrowers must get the advertised normal loan rate, but it’s possible that you’ll get a higher rate.
The issue with risk-based pricing is that because you must apply to find out what rate you’ll pay, the provider will conduct a credit check and leave a ‘footprint’ on your file. A high number of credit searches in a short period of time can harm your credit score.