| Short term loans

Which Type Of Loan Is Best For Me?

At some point in our lives we may need to borrow money, and not just a quick favour from friends or family, but a proper financial transaction that requires a contract, repayments and so on. As you probably are aware, it is not just banks that grant loans any more. There are loan companies that specialise in loans, and some specialise in just one specific type of loan. Which type of loan is best for me? It’s a question we get asked a lot, so we wrote down some advice.

Getting Started: Credit Scores

The best place to begin, is the beginning; before you need a loan. So first things first, check your credit history and credit score. You can do this directly with the credit bureaus, either for free, or for a very nominal fee. The three to use are generally Experian, Equifax or Call Credit.
You want to review your credit history for any errors or omissions. If something is incorrect, have the credit bureau correct it. Should you spot something missing that could help your score, ensure it is added to your report. If the score is short, think about how to improve it before getting a loan.

Loan Types

In some instances the item you are purchasing that you need a loan or financing in order to purchase, dictates the type of loan you need. Everyone’s circumstances are unique, so there are loans for every situation.


If you are buying a property, be it a flat, or fully detached house, unless you are paying cash, you will need a mortgage loan. Mortgages are loans specifically aimed at financing property, and the loan is secured by the property. If you default on the loan, the property can be repossessed.

A small deposit will direct you to mortgages that can be granted with only a 10% or less deposit. If it is affordability, then you may be looking at a 25 year term mortgage, or perhaps an interest only mortgage, both of which can reduce the monthly payments.

Car Loans

HP/Hire Purchase: Hire purchase loans are loans granted and secured against the car, or any item for that matter. You make the monthly payments, and at the end of the loan term, you own the car. The loan is secured by the car, which means if you don’t make repayments, the bank can repossess the car.

PCP/Personal Contract Purchase: PCP car financing is very popular right now, in part due to its flexibility and reasonably low deposit.You make monthly payments for the loan term, usually three years, and at the end of the loan term you have a number of options. You either return the car, keep the car and make an extra payment or replace the car.

Leasing: You also can lease a car, think of this as a long-term car hire. At the end of the lease, you give the car back. You never own the car.

Personal Instalment Loans

Personal loans are unsecured loans granted for any purpose, and one of those purposes, could be to buy a car. The loan can also be to buy a caravan, camper van, pay for a wedding, a holiday, consolidate other accounts, any reason. As these are unsecured loans, you usually need fairly good credit to be approved. Terms for instalment loans can be for almost any term, 12 months, 18 months, or even 5 years, and any term in between.

Credit Cards

Credit cards are a type of loan as well. They are a revolving line of credit. You have a credit limit, and can use the card to buy anything you want, or get cash advances, up to the credit limit. They are good as they are convenient and easier to carry around than a lot of cash. Credit cards can be used to buy anything, including a car if your credit limit is high enough. Although using a credit card to buy a car is not a great idea as there are better and cheaper ways to finance a vehicle.


Overdrafts are loans as well, only they get paid back very quickly, usually when your next deposit is paid in. They are good for short-term borrowing. They act as a buffer zone if you are having a difficult month.

Bad Credit Loans

Bad credit loans are just as their name implies. Loans for people with bad credit. The rates of interest will usually be higher than other types of loans because the bad credit score lessens the trust from the lender.

Payday Loans 

Short-term loans, 30 days or less, and are not based on credit, but that you have a job, a bank account, and an afford the loan.

Guarantor loans

Granted based on the fact there is a guarantor. Someone to guarantee the loan should the borrower default on payments.

Logbook Loans

Loans granted against a car or vehicle that has value. Credit is not an issue as long as you have a car and can afford to repay the loan. The car is pledged as collateral for the loan.

Which Is Best For Me?

So as to which loan is best for you, what are you requiring the loan for?What is your affordability in monthly payments? How is your credit?
The answers to these questions will help in determining the best type of loan for you.
Examine the different types of loans. Think about your situation. Do you have a guarantor, and would you be comfortable with one? How much do you require a lender to give you? How much time do you need to repay? Then decide which loan is best for you.

  No Obligation Application