The two most well-known types of loan are an unsecured loan and a secured loan. These are two very different ways of obtaining credit, the big difference between the two is the rate of interest you will be charged. Unsecured loans typically have a higher rate of interest than secured loans.
The definition of a secured loan is that you borrow money against collateral, i.e. something of value, usually, your home. With an unsecured loan the lender has no security if you fail to make the payments; this is why the interest rate will be higher.
Now more than ever there are large numbers of lenders competing for borrowers. This places the public in a good position to negotiate for lower interest rates and better terms.
There are obviously pros and cons to secured as opposed unsecured loans, a secured loan will be much cheaper each month than unsecured loan. But on the other hand, if you fail to make the payments it is possible that you could lose your home.
An unsecured loan does not require that you risk your house, but on the other hand you will pay more interest and therefore bigger monthly payments. Secured loans are probably best avoided when you need relatively small amounts of money, it does not seem very practical to risk the roof over your head for a small loan.
Well within living memory, unsecured loans where the territory of very dubious lenders and organised crime. Trading standards and other government authorities have now managed to remove 99% of these dubious lenders. But care should still be taken when dealing with companies offering unsecured loans.
It is important to approach a quality broker, to help you in finding the right loan company to deal with your case. These days, many of these loan officers are located online as well, as in traditional offices.
With the removal of these criminal lenders the unsecured loan market has moved into mainstream business, with many large household name companies willing to make unsecured loans available to the public.
Secured loans, for many generations, were the exclusive world of banks and building societies. But over the last 20 years many new lenders have come into the market, offering a wider choice and more competition, which has resulted in a better deal for the borrower.
Many of these ‘new’ lenders are not actually new; they are large foreign companies that have moved into the UK market from their home countries in the EEC, America and even as far afield as Asia.
For example, well known 'British' high-street bank HSBC, is in actual fact "The Hongkong and Shanghai Banking Corporation". The Hong Kong and Shanghai Banking Corporation, who are probably the largest finance and banking company in the world.
Borrowing secured and unsecured loans from companies that may not be familiar to you, but are world renowned financial institutions is now an everyday event. With so much competition it is essential that you get the best advice possible in order to obtain the best deal you can on a secured or an unsecured loan.
It is not practical to search out the best deal on your own. Professional advice is certainly the best way to secure a deal that will benefit you in terms of the amount you pay in interest and your monthly cash payments. So take advantage of a broker and his services it is sure to benefit you in the long term.