Not every one of us has the ability to fund big-budget ventures through our personal financial resource. We have to seek recourse to external monetary aid sometimes. Not that provided by your family and friends which are limited amounts; but the backing provided by professional lenders. The capital that we receive from them is known as personal loan.
Personal loans are funds that may be obtained from various avenues- from high-street private lenders to banks. They are the monetary help through which your personal projects can be financed. Purchasing a car, buying a house or renovating the one you are living in, paying off your debts, funding the college education of your kids, medical expenses, wedding expenses and holiday expenses are only a few instances of what a personal loan can make happen.
There are two basic forms of personal loans. They are:
- Secured personal loans
These are loans for which you have to provide collateral/security. Collateral/security simply means a personal asset that you are pledging against the loan- like your home or property. You can borrow an amount up to £100000 for a repayment term up to 30 years.
- Unsecured personal loans
You do not have to pledge your assets for this option because it does not require collateral/security. You can borrow any amount up to a maximum of £25000. These loans carry higher interest rate than the other option but they are better for smaller requirements as term does not extend beyond 10 years.
While choosing options, you should weigh the pros and cons of each. The one which is more affordable and which can be paid off comfortably on your repayment capacity is the better one.
Personal loans are provided by a lot of lenders. Most of them have their official websites on the web where they provide free loan quotes. Take advantage of this facility and compare as many quotes as you can in order to find affordable rates. Don’t worry; the application is non-obligatory so you can apply without finalizing the deal.
Summary
Personal loans are funds for personal projects. They can be availed under two options depending upon whether you are providing collateral or not.