Glossary of Secured Loan terms
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- Pay Day Loan
Payday loans are a special type of loan for people who run short of cash and need to borrow a small amount of money for a short period of time. They are usually arranged very quickly and the money can be transferred into the customers account within a few hours. They need to be repaid fairly quickly too though, usually within a few weeks and because they also attract an administration fee, the typical rates of interest may look high. But remember you are only borrowing the cash for a short period, so the actual amount of interest you need to repay can be quite manageable.
- Personal Loan
The term "personal loan" is used generally to refer to loans made to individuals rather than businesses. They can be either secured or unsecured but generally this term is used to refer to unsecured loans as they are more prevalent. Interest rates for these loans vary, with larger personal loans usually attracting lower rates.
- Secured Loan
When the equity in your home is used to provide security to the lender, the loan is referred to as a secured loan. These loans are usually reserved for larger amounts of money and are commonly taken out over longer repayment periods, sometime as long as 25 years. They are also used for applicants who have poor credit histories. Without the security of the applicant's property, the loan provider may not be able to provide the loan. Because the security attached to the loan lowers the risk for the lender, they can often provide loans at lower rates of interest. Many debt consolidation loans are taken out under secured loan terms.
