A VIDEO GUIDE TO PERSONAL LOANS | HOW THESE UNSECURED LOANS WORK | WIDE VARIETY OF LENDERS AVAILABLE

Hello and welcome to Solution Loans This short video covers a guide to personal loans

Personal loans are unsecured loans that do not require the borrower to put up a form of security – be it a house or vehicle or jewellery – as a guarantee to the lender So they differ from homeowner loans, logbook loans and other forms of secured lending There is also no requirement for a third party to act as a guarantor The lender bases a decision on whether a borrower will be able to repay the loan by assessing the applicant's creditworthiness, income and other forms of financial commitmentsThey can offer a borrower an affordable option to pay for a car or a holiday in a flexible way with repayment schedules which can range from one to 10 years

Most people who successfully apply for a personal loan are able to borrow between £1,000 and £25,000 and there are lenders who have financial products for non-homeowners as well as tenants & homeowners Interest rates are lower than for other forms of finance and there are now personal loans available for borrowers with less-than-perfect credit ratings Personal loans are available from a wide range of lenders and applicants are not restricted to the traditional High Street banks So how exactly do personal loans work? There are probably more unsecured loan products on the market than any other type of loan with each lender having different acceptance criteria, different repayment schedules and different interest rates In general, however, the more that you borrow, the lower the APR you are likely to pay but this will depend upon your financial circumstances (including your credit report) and the length of the repayment schedule

If you have a good credit history, then it's likely that you'll be able to access personal loans with the lowest interest rates However, there are increasing numbers of loans available to people with less-than-perfect credit histories and interest rates on these compare favourably with other forms of lending – especially against credit cards and store cards Most personal loans are offered with fixed rates meaning that you'll know exactly up front how much you'll have to repay and what the monthly repayments will be for the term of the loan This can be particularly useful if you need to be able to budget well in advance to suit your own lifestyle The APRs offered vary according to changes in the bank rate but once you've been accepted, your interest rate will not change

So why would you apply for a personal loan? An unsecured loan could be the right form of finance for you if you're looking to borrow a fairly substantial amount, if you don't want to end up paying a very large amount in interest charges and want to know exactly how much you'll be repaying over the duration of the loan Personal loans are frequently used to fund home improvements, car purchases, and holidays or even to consolidate other debts So what are considered the downsides? While not having to provide security in the form of a home or a vehicle for a personal loan and despite there being a wider range of them on offer, there are still fewer unsecured loans available to applicants with poor credit histories You're also likely to have to pay a higher interest rate than with a secured or guarantor loan and the amount that any applicant will be able to borrow – irrespective of credit history – will be less than with a secured loan Repayment schedules are also shorter although you can still choose to repay over timescales over 10 years

If you're considering an unsecured loan, bear in mind that if you find yourself in a position to repay the loan early, you could still face early repayment fees, although you could reduce your interest charges significantly Although these loans are not secured against property, lenders can still pursue a defaulting borrower's assets through the courts So in conclusion personal loans provide access to safe forms of finance for large numbers of borrowers who do not want the risk of securing their loan with their house or other possessions They also mean that any equity you've built up in your house is preserved should you get into financial difficulty Tenants as well as homeowners are accepted for many personal loans

Personal loans also provide cheaper forms of longer-term finance than credit or store cards and are generally lower cost than overdrafts over the long term