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What is a secured loan?
A secured loan is where you borrow money and the loan is secured against an asset such as your home or car. This means that should you fail to meet the monthly loan repayments, the lender can seize the asset in order to get their money back.Secured loans tend to be more favourable if you are looking to borrow larger amounts of money. Interest rates tend to be more attractive than if you borrowed the money as an unsecured loan. This is because the lender has a ‘guarantee’ that he will get repaid in the form of your asset.
What is an unsecured lender?
An unsecured lender is a company that provides a loan without asking for some form of security (such as your home or car). Unsecured loans can be quicker to arrange but will cost more in interest than a secured loan.This is because the unsecured lender is taking a greater risk as should you default on loan repayments, the lender cannot seize your assets in order to get repayment.
What is an early redemption penalty?
An early redemption penalty is a financial penalty that you have to pay should you settle lending such as a loan or mortgage early. When looking for credit, it makes sense to check out the early redemption clause. That way you can see how much you could be liable for should you decide to pay off the borrowing before the end of the agreed term.
What is Experian?
Experian is one of the major UK credit reference agencies.Lenders will use a credit reference agency to check the suitability of an applicant based on their financial history. This is known as a credit report.As a consumer, you can request a copy of your credit file from Experian to check that all the data on it is correct and that your details have not been used fraudulently.
What is a bad credit rating?
When you apply to borrow money, the potential lender will look at your credit file to judge your credit worthiness. He will then give your application a credit rating such as excellent, good or bad. If you have a bad credit rating, you will find it hard to get accepted for credit. A credit rating tends be ‘bad’ where you have a poor financial history. Late or missed payments and County Court Judgements will affect your credit rating.