Personal Loans, Secured Loans, And Credit Cards

By Author: Bonny Kominek
Total Articles: 32
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At present, there are essentially three ways to borrow money from private lenders in the UK. One is to take out a credit card. Another is to take out a personal loan, and the final option is to take out a homeowner loan. Depending on your circumstances, one type of loan will usually be more suitable than the others.

If you need a large amount of money quickly, then the easiest way to get it is to take out a secured loan, as these offer great interest rates and do not hinge on the result of a credit check. However, your home may be repossessed by the lender if you fail to keep up with the repayments.

An unsecured loan, also known as a personal loan, requires no collateral to be put up, but you do need to have a fairly clean credit record if you are to be accepted for the loan. These types of loans tend to be better value for borrowing larger sums of money than credit cards, although they tend to be a lot more expensive than secured loans.

Credit cards can be a great option if you do not need to borrow that much money, especially if you get one with a tempting introductory offer and manage to pay off the debt ...
... before it expires. For smaller sums, these are a lot better value than personal loans.

Credit cards are of little or no use if you need a cash lump sum of more than 200GBP, and payments are structured to keep you in debt for as long as possible. You can however beat the system by paying off more than the minimum payment each month.

Personal loans tend to be pretty poor value when it comes to borrowing smaller sums of money. However, they do have an edge over credit cards in that they have a rigid repayment schedule, which prevents you from getting dragged into a debt spiral.

If you do not own any property, then your options will be restricted to personal loans and credit cards. Personal loans tend to be pretty poor value for borrowing smaller sums of money, but if you use them to borrow larger sums, the interest rates are usually more favourable.

You can avoid paying credit card interest altogether if you keep transferring your balance to new credit cards with zero percent introductory offers. You should be aware, however, that lenders take a dim view of this activity, and it can affect your ability to obtain credit afterwards. This article about loan types was written by Bonny Kominek. For great deals on secured loans, credit cards, and personal loans, visit the Alliance and Leicester website.