Types of loans
There are two main types of personal loans: secured and unsecured. Unsecured loans are not tied to any of your assets, but secured loans are – usually to your property, which is why they are often called homeowner loans. If you default on a secured loan, your lender can force you to sell the asset to pay off your debt. Car loans are also secured loans, with the lender using the vehicle you are buying as security for the loan.
Homeowner loans are tied to a property. Photograph: Frank Baron Most lenders offer unsecured loans of between 5,000 and 25,000, although some cap borrowing at 15,000. Smaller loans are available if you shop around, but if your borrowing requirement runs into hundreds of pounds rather than thousands there may be better ways to borrow the money.
If you want to borrow more than 25,000, you will need a secured loan. You will also need enough equity in your property to secure the loan.
Interest rates
The APR (annual percentage rate) on a loan is the amount you will pay in interest each year. Most adverts for loans tend to quote a typical APR; you will not necessarily get the same rate of interest when you...
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