Glossary of Secured Loan terms
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- Bad Credit Loan
If you have a good credit history then you may be in a position never to need a bad credit loan, but many people are not so fortunate and often do not qualify for some personal loans on offer. They may have acquired their poor credit rating by failing to repay a loan in the past or by missing or being late on some loan or mortgage repayments in the past. Some people find they have a poor rating but only because they have had very little to do with loans, mortgages or credit cards in the past and therefore there is little evidence to show a lender that they can repay their debts. People with one or more CCJ's (County Court Judgements) will also normally have a poor rating. Even though many lenders will not accept people with this type of credit history, there are several specialist companies who deal specifically with these applicants. It's fairly certain that you will be charged a higher rate that the best rate loans, because the loan providers will view you as more of a risk compared to someone with a very clean credit record.
- Bank Loan
The major UK high street banks all offer loans and they have easy access to a huge audience to promote their products. Almost everyone has a bank account and most of us will be contacted regularly by our banks to be offered loans, mortgages and other products. Because of their large customer base, banks complete more loans than anyone else, but it doesn't mean they are offering the best rates. In fact with a little shopping around you can probably find a better rate. Banks rely on the convenience they offer to attract their loan customers. It's very easy just to walk into a bank and sit down with one of their advisors. However the landscape is changing and it is now just as easy to arrange a loan over the internet.
- Car Loan
When talking about car loans you should be careful to understand exactly the nature of the deal as there can be many options. For actual loans you could looking at a straight secured or unsecured loan or the loan could be linked to the car. This means that the finance company will normally remain the owner of the car until the loan is paid off. If you are buying a new car and the car provider is supplying the loan there may be some special terms you can take advantage off - for example deferring some of the purchase price until the end of the loan. These kind of terms may seem attractive at first glance but it could just mean you are borrowing more money for longer and therefore paying more interest.
- Debt Consolidation Loan
Many people owe various amounts of money to a mix of creditors. Perhaps they have one or two credit cards, some store cards, a car loan, an overdraft and maybe even further bank loans. For some people, all of this credit adds up to a significant amount and if they were to calculate their total interest payment they may be surprised to find the rates they are paying are very high. In these situations it is often worthwhile looking at debt consolidation loan where you take out one new loan that is used to pay off all the other debts you have. You will end up having just one loan remaining and if done correctly, you should end up paying a lower rate of interest and will normally set the loan up so that your monthly repayment figure is also lower.
