The difference between secured and unsecured loans
Secured Loans vs Unsecured Loans
Before making an application for any type of loan, it’s vital that you understand what it entails and are confident that it’s the right borrowing option for you. Secured Loans and Unsecured Loans are very different, so take a look at this comparison guide from Evolution Money to get to grips with the differences and what to apply for.
Secured Loans
Often referred to as a Homeowner loan, a Secured Loan is usually only available to those who own their home as the amount borrowed will be secured against the customers property. Secured Loans are therefore less risky for the lender, often resulting in lower rates of interest.
For homeowner applicants, Secured Loans can be used to borrow much larger amounts, for a wide range of purposes, with customers typically borrowing over £10,000 with Evolution Money.
However, the amount you’re able to borrow, the lending term in which you pay it back and the rate of interest on your loan are all dependable on your unique financial circumstances. This can include your previous borrowing history, current credit score and the amount of equity you have available on your home, and these conditions vary between lenders.
Pros of Secured Loans
- In comparison to Unsecured Personal Loans, Secured Loans may offer a much larger loan amount. Some personal loans may only offer customers up to £25,000, but with a Secured Loan from Evolution Money, you could borrow up to £50,000 for a wide range of purposes.
- If you have a poor or a low credit score, you’re more likely to be accepted for a Secured Loan than an Unsecured Loan. This is because there is less risk for lenders when you borrow money against your home.
- As well as offering customers a larger loan amount, Secured Loans often offer longer lending terms to make repaying your loan more manageable. At Evolution Money, we offer customers up to 20 years to repay their loan.
- You may be paying a lower rate of interest than a personal loan due to there being less risk for the lender.
Cons of Secured Loans
- If you are unable to keep up your monthly repayments or fail to pay back the amount on time and in full, then you may risk more severe financial difficulties and the loss of your home.
- Some Secured Loans have variable interest rates, early-repayment charges and borrowing fees. Before applying for any loan, you must make sure you understand and are aware of all terms and conditions to avoid paying any extra cost.
Unsecured Loans
Unsecured Loans, or personal loans do not require you to own your home in order to be eligible.
As an Unsecured Loan is not secured against your home there is an increased risk for the lender. This may mean the interest rates are higher than a Secured Loan.
As with Secured Loans, other terms and conditions on a personal loan can vary depending on the lender too. It is therefore important that you check and understand the agreement before applying for a loan.
Pros of Unsecured Loans
- In comparison to Secured Loans, Unsecured Loans are often more widely available as they do not require the applicant to borrow against an asset such as your home.
- Unsecured Loans can be ideal if you are able to repay the amount over a shorter lending term and can afford a higher interest rate.
Cons of Unsecured Loans
- With an Unsecured Loan, high rates of interest on both larger and smaller loan amounts can prove to be expensive.
- One of the factors impacting the person borrowing an Unsecured Loan is their credit score. This can mean that people with a poor credit score may not be accepted for a loan, and only those with a good credit score would be able to apply for the better deals on interest and lending terms.
To learn more about your available borrowing options, differences between Secured and Unsecured Loans, and how to borrow money safely visit http://www.moneyadviceservice.org.uk/
Choosing a Secured Homeowner Loan from Evolution Money
At Evolution Money, we look at more than just the numbers on a computer screen when considering a loan application and instead strive to understand each customer’s unique circumstances. To discover our Secured Homeowner Loans, check out our simple online application process to receive a no-obligation quote that won’t affect your credit rating.
Our Secured Loans allow customers to borrow between £5,000 and £50,000 with flexible lending terms between 1 and 20 years.
As one of the fastest-growing UK finance companies and with over 24,000 customers accepted since 2011, we like to say ‘yes’ to our customers at Evolution Money. We don’t base our decision solely on your current credit score or the amount of equity left in your home. This can mean that even if you possess a bad credit score or have been previously refused a loan you still may be eligible for one of our Secured Loans.
To find out more about our approach to borrowing and how a Secured Loan from Evolution Money may be the right borrowing option for you, call our qualified loan advisors on 0161 814 9158.
Think carefully before securing debts against your home your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
