Loan Types

Secured Loans: are loans that requires the borrower to provide the lender with an asset as form of security. This is mostly done on property and can be done on both residential and business properties.

Secured Loans or Homeowner Loans are available in varying amounts from lender to lender and can vary from £5000 to £500,000. The loans are repaid normally between 3 to 25 years on a monthly basis. Payments are agreed at the start of the loan and are normally fixed throughout the agreement.

Lenders charge interest on the amount you borrow, which is referred to as the Annual Percentage Rate (APR). The amount you can borrow, the term available and the APR will all depend upon the equity you have in your property, the lender's view of your ability to repay the loan and your personal circumstances, for example any adverse credit. Subject to your circumstances, you may be able to borrow up to 125% of the property value.

Generally, secured loans are much easier to obtain than unsecured loans. This is because the lender has the added benefit of security. This also means that persons who are self-employed, have recently changed jobs or who have adverse credit can take out a loan. They are also useful for larger amounts or where the applicant requires a longer repayment period.

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Personal Loans: are loans that are NOT secured on any property and are available to both Homeowner's and tenants. Interest is normally worked out the same as secured loans. Available amounts are normally up to £25,000. Personal loans are agreed at a set rate of interest, for a set period and a set amount. This means that there is no temptation to borrow more, as with a credit card, and you can budget effectively to manage the repayments.

Pay Day Loans are a different type of personal loan. Pay day Loans are short term advances normally between £80 and £750 that are repayable in full including charges on your next pay day. This is normally a term of 30 days, but can be as little as 7 days.

Pay day Loans are great when you need a quick financial fix. Once an application has been approved your funds are transferred on the same day direct to your bank account. A Pay day Loan allows you instant access to spend as you wish.

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Car Loans: are generally secured on the vehicle you are buying. As with most loans the interest is front loaded, meaning all the interest is added at the start of the loan for the whole finance agreement and NOT applied on a weekly or monthly basis. The normal car loan is classed as a Hire Purchase(HP) agreement. HP is secured on the vehicle and the vehicle is at risk of repossesion if the payments are not kept up to date.

However if over a third of the agreement is paid off then the lender cannot recover the vehicle back unless a court order is obtained. If over half the agreement has been paid you can Voluntary Termination the vehicle back to the company with no extra charge to the customer. This means the vehicle is taken back and the account is closed without further liability.

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Credit Cards: A user is issued credit after an account has been approved by the credit provider, and is given a credit card, with which the user will be able to make purchases from merchants accepting that credit card up to a pre-established credit limit.

When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates their consent to pay, by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a Personal identification number (PIN). Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a Card not present (CNP) transaction.

Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. The cardholder must pay a defined minimum proportion of the bill by a due date, or may choose to pay a higher amount up to the entire amount owed.

A balance transfer is the act of transferring debt from one credit card to another assuming the newer card has better terms and rates. The balance transfer offer consists of 3 elements, offer rate, offer duration, and transaction fee. There are usually 3 types of offers by rate and duration: Purchase rate, teaser rate, and fixed life of loan rate.