Glossary of Secured Loan terms
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- Tenant Loan
If you don't own a property and are renting or living at home you will not be able to take out a secured loan. Tenant loans are available for both private and council tenants. Many types of tenant loan exist. If the tenant has a poor credit history or other debts, specialist lenders exist to help.
- Unsecured Loan
Many people taking out smaller value loans will opt for an unsecured loan. These are available from various different lenders and are often promoted by a further selection of partner companies, including supermarkets and other retailers. Unsecured loans are provided over shorter repayment terms than some other loans, the maximum period usually being 7 years. The interest rate offered depends on 2 factors: the credit history of the applicant and the size of the loan. Larger loans often attract lower rates whereas small loans can sometimes be twice as expensive.
- Variable Rate Loan
The interest rate charged on a variable rate loan will change over the life of the loan depending on the rates set by the Bank of England. The Bank of England base rate is reviewed every month and if it is changed then loan companies review their own rates and may decide to adjust them. Rates can increase or decrease. Loans for larger amounts are often repaid over longer periods and most loan companies will apply variable rates to these types of loans. This is because they cannot predict how interest rates will change in the future.
