For most personal needs, one can find a suitable personal loan product in the credit market – in both secured and unsecured form. Though secured personal loans offer maximum benefits, they can only be availed by those who are capable and willing to pledge collateral against the loan amount – homeowners and property owners.
Unsecured personal loans, on the other hand, can be availed by all UK residents over 18 years of age – subject to basic credibility parameters like past credit history, employment status and debt to income ratio. In other words, irrespective of the loan seekers capability and willingness to pledge collateral, unsecured personal loans guarantee credit assistance to all.
Homeowners and property owners: As pledging collateral may not be always practical or essential, this personal loan sub-type is a better alternative for people who are capable of offering collateral, but are unwilling to get into property related legalities or risk their property for a small amount.
Tenants and students: As every UK resident is not a homeowner or a property owner, unsecured personal loans is the only option for people who are incapable of offering an asset as collateral because they do not own one or are living with their parents.
Because of this no collateral attribute, the lender’s investment remains unprotected. As a result, the borrower has to settle for limited amount (normally between £500 and £25,000), high APR (normally between 7.4% and 41%), fixed payback method and non-negotiable loan terms and conditions.
personal loans sub-type is catching up in the UK loan market because it’s no collateral attribute offers certain benefits too – less paperwork and quick service in the absence of lengthy property evaluation procedures, and no immediate risks in the event of repeated defaults or non-repayment of the loan amount.
Hence, personal loans in unsecured form are ideal for small monetary requirements, as offering collateral may be needless. And, for urgent requirements too, as getting into lengthy, time-consuming property evaluation procedures may not be possible.
By: bernard john