5 Alternatives to Secured Loans

If you don’t have any property or asset to use as collateral for your personal loan, this is where unsecured loans may be a viable option. Whether you have good credit or bad credit, there are a number of unsecured loans ready to help you deal with any financial emergencies. Here are 5 unsecured loans that may be good alternatives to secured loans:

1. Credit union

If you’re a credit union member, you don’t have to look elsewhere for a quick cash loan. The loan offers may not be as much as what a secured loan can offer but credit unions can enjoy lower interest rates than other types of unsecured loans. With credit unions, you may be able to borrow between £500 and £5,000.

S46919-xlimage-R9350-the-board-of-directors-and-management-of-fermoy-credit-union-limited-moved

2. Credit cards

You can also always resort to credit cards to tide up your short-term financial needs. Credit cards come handy for most purchases nowadays. If you need cash, you can always use your cards cash advance. Just make sure you pay your bill in full to avoid incurring extremely high interest rates.

3. Peer to peer loans

Another type of unsecured loans that’s been gaining ground in the UK market is peer-to-peer lending. With this type of loan, you can borrow directly from the lender. There’s no need to go through the middlemen like how it is with banks. Just go to a peer-to-peer lending website and post the amount that you need. If you meet the lender’ requirements, you should be able to get your cash within 24 hours.

4. Guarantor loans

Guarantor loans are another type of loan that does not require collateral but it does need you to bring a guarantor to co-sign the debt agreement with you. Guarantor loans offer larger loan amounts than other types of unsecured loans because of the guarantor involvement. This type of loan is specific for people with bad credit looking for a fast, low cost alternative to secured loans.

Guarantor-my-loan-Logo-1

5. Payday loans

Payday loans are the most controversial type of unsecured loans. These are loans offered for people with credit rating issues. As the name suggests, payday loans are loans that need to be repaid on your next paycheck or in the next 28 days. Payday loans are controversial because of its steep interest rates. On average, payday loans are advertised with 1,000% representative APR. It’s not only expensive but it’s also traps most borrowers into a cycle of debt.

 

 

What are the Different Types of Secured Loans?

If you’re looking to borrow money and you’re willing to use your asset or property for collateral, you might find great deals when you opt for secured loans. Secured loans, as its name implies, are personal loans secured on an asset such as your home, vehicle, bank accounts, stocks, bonds and more. Because there’s security, the risks are lower for lenders allowing them to offer borrowers loan deals with lower interest rates.

If you need a large amount of money for a financial emergency or investment, secured loans may be the best option you can take advantage. Here are some of the most common types of secured loans available in the UK today:

Mortgage

Mortgage loans are among the most common secured loans for people looking to buy a house. This type of loan is secured by the property you are purchasing. In other words, your home is at risk for foreclosure in the event that you are unable to pay your monthly mortgage payments. Since homes are a major investment or purchase, mortgage loans come with longer repayment terms usually lasting for 15 to 30 years. The interest rate is also lower in most cases because of the security involved.

Home equity loan

If you are currently a homeowner and you want to borrow on your home’s equity or line of credit, you can do so with home equity loans. This type of loans is essentially a type of second mortgage allowing you to cash in on your home’s equity. This type of loan is usually offered for borrowers who wish to remove their homes, consolidate debts or fund college education. With home equity loans, the maximum amount you can borrow will depend on the current market value of your home and how much you’ve already paid on your mortgage.

Auto loan

An auto or vehicle loan works just like your mortgage loan. The car you’re purchasing will be used as collateral that in the event of nonpayment, the lender can repossess your vehicle. With this type of financing, the lender usually pays for your vehicle in full then you pay your lender on a monthly basis including interest. Before you can avail an auto loan, lenders have a few key requirements you need to meet. You must live in the UK with a steady stream of income per month. You must also have a good credit history to be able to avail the lowest interest rates available.

Title loans

Title loans, on one hand, are loans that use your asset or property title to give you a personal loan. For example, you can use your paid-off vehicle’s logbook document to take out a logbook loan. In order to avail this type of loan, you need to meet the basic requirements as with other types of loans. But there’s one advantage with title loans. It is usually available for people with bad credit. You’ll need to pay higher interest rates in exchange but for most people who cannot avail a loan elsewhere, title loans come as handy alternatives.

Savings-secured loans

If you have money stashed on the bank, you can use that to secure your loan. There are lenders offering savings-secured loans for people who don’t have a home or a vehicle they use as collateral. When you opt for this type of loan, your lender will require your bank statements. If approved for the loan, the bank will place a hold on the funds until you’ve paid off your loan in full. Other than savings, you can use your CDs or bond certificates to avail this type of loan.