A_Beginner_s_Guide_To_Personal_Loans

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					A Beginner's Guide To Personal Loans

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597

Summary:
If you’re looking to borrow a sum of money then the chances are that
you’ll look to take out a personal loan rather than any other type. The
term personal loan is simply used to describe standard types of borrowing
– i.e. a loan taken out by a consumer rather than a business for general
purposes (but not for a mortgage which is obviously dealt with by a
mortgage loan).

The majority of personal loans can be used for any purpose and the
chances are that your lender won’t eve...


Keywords:
loans,life,insurance,assurance,personal,journalist,finance,uk


Article Body:
If you’re looking to borrow a sum of money then the chances are that
you’ll look to take out a personal loan rather than any other type. The
term personal loan is simply used to describe standard types of borrowing
– i.e. a loan taken out by a consumer rather than a business for general
purposes (but not for a mortgage which is obviously dealt with by a
mortgage loan).

The majority of personal loans can be used for any purpose and the
chances are that your lender won’t even be hugely interested in what you
want the money for. Their primary concern is checking that you’ll be able
to repay your loan! This situation can be different with specialist loans
(which also fall under the banner of personal loans) such as home
improvement loans and car loans, for example. These loans are expected to
be used for their specified purpose – i.e. a major DIY project or a car
purchase.

Apart from this fact the majority of personal loans work in much the same
way. You apply for your loan, get your money and then spend it as you
intended. You will then make a regular payment (usually on a monthly
basis) to your lender to repay the money you borrowed for the period of
time in your loans agreement. This payment will be made up of a sum of
money that goes to pay off the original sum you borrowed plus a sum that
goes towards paying off the interest you’ll be charged. So, at the end of
your loan term you’ll have repaid your original borrowings and the
interest attached to your particular loan.

One difference worth noting here is that between unsecured and secured
personal loans. Unsecured loans are given to consumers without security
(or to those that choose not to use available security to get a loan).
These loans will generally have higher interest rates attached to them
than secured loan options and you may be restricted in how much you can
actually borrow here. Secured loans, on the other hand, will have lower
interest rates and can be taken out for higher sums. The reason behind
this is the fact that this kind of loan will use your property (usually
your home) as a guarantee against your loan. So, if you default on your
repayments your lender has a cast-iron guarantee that they will get their
money back via the property you used as security.

If you aren’t a home owner then you will generally be restricted to
taking out unsecured loans here but, if you do own your own property,
then you’ll have to make a choice between a secured or unsecured loan.
This really boils down to personal preference and how comfortable you are
using your home as security in order to get a better deal. In the
majority of cases this isn’t an issue and most people will opt for
secured loans to get the right kinds of rates and loan amounts for their
purposes.

Do be careful to make sure that you understand both how personal loans
work and how to get the best rates for the loans you take out before you
sign up to anything. There are hundreds of sites on the Internet that can
give you more detailed information or that can even help you apply for a
loan – take a look online for personal loans in a UK search engine (such
as msn.co.uk for example) before you start for some useful information.

				
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