The decision as to whether you seek a Secured or Unsecured loan is a personal one, and will depend on a number of factors. These will include how quickly the money is required (an unsecured loan is quicker), whether security is available and/or whether you want to provide security. If security is provided, a secured loan will usually be cheaper option that an unsecured loan.

Unsecured
Pros Cons
Quick and Easy PG’s required
No charges or security Slightly higher in Price
Often no fees (legal etc.) Amount available is limited
Flexible
Secured
Pros Cons
Lowest price loans Fee's
No top end amounts Security is required

Two factors speed and cost

If security is available then it is the decision of the asset holder whether they are comfortable to provide this asset in support of borrowing, if so a loan would be secured with the understanding that if a loan is not repaid then the lender can take control and sell the asset concerned

The main two factors to also bear in mind are cost and speed, both loan structures have their pros and cons.

Unsecured loan
  • Usually quick (can be within 48 hours of a request being made) as there is no security involved and therefore no need to involve solicitors and valuers in the process.
  • The borrower would usually expect to pay a higher interest cost, as the lender will charge more given there is no security in the background to mitigate the lenders risk.
Secured Loan
  • A Bridging Loan can be arranged in 2-4 weeks, but other types of secured loans can typically take 8-12 weeks, as the lender will need to have a valuation undertaken and arrange for solicitors to be involved to take the a legal charge over the security concerned (there are cost involved for the borrower).
  • Interest rates will usually be lower. Given legal and valuation costs involved a borrower should consider carefully if wanting to borrow say less than £50,000 on a secured loan, than an unsecured loan.

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