Unsecured Loans - For the tenant as well as the homeowner.

by Eric - Date: 2007-01-29 - Word Count: 337 Share This!

There are basically two types of loans in the UK financial market today. They are secured loans and unsecured loans. Secured loans are given against the borrower's collateral security. In other words, if the borrower does not repay the amount, there is likelihood of the lender seizing his collateral and using the money to pay off the impending amount.

With unsecured loans, borrowers do not face as much risk with the absence of collateral. It is the lender who is in danger here. If the borrower does not pay on time then the lender is at a risk of not getting back his money. Of course, there is always the option of the court. Still, lenders would rather not go through the hassles of the legal system. To compensate for a possible default, lenders use the interest rates as a cushion. For unsecured loans, the interest rates are higher.

There are many benefits with this loan type though. Unsecured loans are processed relatively faster than the secured variety. This has mainly got to do with the lack of documentation process in the case of unsecured loans, as there is no collateral to be evaluated. And, of course, another major advantage is the lack of collateral in the case of an unsecured loan. The borrower can pay back the instalments with a certain peace of mind, secure in the knowledge that a default will not lead to the seizure of his property.

There are several places to get unsecured loans. They are banks, high-street lenders, private lenders, building societies, and the Internet. Of them all, if you look at today's market, the online option happens to be the best in terms of choices and convenience.

However, in order to get the best deal, one should undertake adequate research before availing any loan type. There is a seemingly infinite catalogue of lenders in the market today, and not everybody is there to do business the straight and narrow way. Proper analysis and comparisons help to circumvent such frauds.

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