Picking the right type of loan could make your borrowing cheaper, easier to manage and lower risk. Different types of loans come with different terms and varied uses. They are tailored for certain people ans certain situations. With that in mind, we took a look at a common question. What type of loan is best for me?
The first thing to decide when sourcing loans in a competitive market is to ascertain why you need to borrow in the first place. This will make it easier to work out which loan is best suited to your individual needs. For example, the type of loan to go on a holiday will differ from a loan to buy a car or buy your first home. Some of the things you might need to get a loan for include the purchase of a vehicle, home buying or renting, an unpaid bill, renovations, holiday finance or even to start a business.
Unsecured loans: These are loans for which you don’t have to provide a security such as a home or asset. You borrow a lump sum and pay it back in fixed instalments over a set period of time.
Secured loans: These are loans which have an asset attached to them. In the event that you are unable to repay the loan, the bank or loan provider can repossess the asset and sell it to recoup the loan.
If you have a choice between the two, try to pick an unsecured loan. We advise this because they do not put your assets directly at risk if something goes wrong.
This all depends on how much you wish to borrow. And how long you wish repayments to last. Decide on those two things, then test the market to see what is out there. The beauty of a site like Moolr is that we have collected together in one place the best lenders on the market. Thus you can see instantly what is on offer without wasting hours scouring the internet. f you have poor credit, the types of loans you can get may be more limited. However, some types of loans are specifically tailored to borrowers with bad credit, such as guarantor loans.
If you need longer to pay a loan back, then some secured loans offer terms up to 10 years. If you plan to pay your loan back quicker, unsecured personal loans are probably more suited to you. Some peer to peer loans last just twelve months and many have no early repayment charges. If you need to borrow a large sum, bridging loans are designed for short term borrowing.