Purchasing the scintillating latest model of your favorite car company, going out for a refreshing holiday, making necessary improvement of your home: there are a lot of such personal needs that a person cannot fulfill with his limited income. For such persons the option of personal loan proves to be a godsend. Whatever may be the need, you can use a personal loan to get it fulfilled.

Secured and unsecured: these are the two ways of taking personal loans. For taking a secured personal loan, you need to offer collateral. Offering collateral is highly risky for the borrower. In case any unavoidable circumstance occurs and you fail to pay off the loan, the collateral will be lost.

Personal loans can be availed by a person even if his credit score is less than perfect. With the lenders engaged in neck to neck competition with each other, a bad credit score has become something easily acceptable. Thus, personal loans work as highly effective tools for fulfilling various personal needs.

Personal loan is a term which includes different meanings. All kind of loans can be described under the head ‘personal loans’. All the consumer loans like equity loans, lines of credit, mortgages etc come under the category of personal loans. There are other loans colloquially known as “signature loans”. These loans are mostly taken for purposes other than business. These signature loans are unsecured loans in which the lender could not take anything, when you default for the loan amount.

Personal loans are a financial tool which can be used for getting financial support for various expenses at times of financial needs. You may need to take personal loans for certain expenses like medical expenses, summer vacation expenses etc. Sometimes these personal loans can be either a curse or a boon. It is easy to get a loan as there are lots of sources available in UK . The remarkable thing is that you have to shop around to get a loan at the minimum rate of interest.

Classification of personal loans

Personal Loans are classified into four namely:

o Cash out mortgage refinancing

o Home Equity Loans

o Home equity lines of credit

o Signature loans

Take a look at each type of loans in detail.

Cash out mortgage refinancing

You will understand what this type of personal loan is with an example. You take a mortgage for 80,000 pounds or on 100,000 pounds. The value of your house goes up to 110,000 pounds. Therefore you can easily take second mortgage for 90,000, with this amount you can set off the first mortgage. You can have remaining amount 10,000 pounds in hand. This is called as “cash out mortgage refinancing”.

Home Equity Loans
Most of lenders want to offer personal loans using the equity as collateral. The lenders are ready to lend you loan up to 125% of the value of home’s equity. It is advisable not to go above your original value of your home.

Home equity lines of credit
These type of personal loans are the as same as home equity loans. The only difference is in the flexibility of credit line. If these types of loans are approved once, it is possible to get extra funds to cover all expenses that you need.

Signature loans
These loans are slightly different from the other three types. These loans never require collateral. You can get loan without pledging any property or any valuable asset.

You may select any of the above explained personal loans depending up on your requirements. Never sign a loan agreement without understand the terms and conditions of the agreement.

Times are tough, and with the holidays just around the corner, almost everyone is running short on cash. If you’ve been having trouble making ends meet, taking out a private personal loan could be the solution to your money problems. Here are some tips and tricks to help you out.

1. Consider all your options.
Is there really any need for you to take out personal loans? It’s possible there is no need to; you may have a better option in the form of home equity extensions to a home loan or a credit card.

2. Look beyond big bank names.
It’s true that big banks are more reputable than others in the same industry – but they are also tougher to get loans from. You may want to borrow money from credit unions, community banks, and smaller financial groups instead. They offer considerably lower interest, they need your business more, and they’re more approachable to borrowers!

3. Don’t make several applications.
Don’t apply for a private personal loan from several financial groups. Once they all go check on your credit history, it will make you appear desperate. At the same time, it will reduce your all-important credit score!

4. Understand the offer.
Are interest rates variable or fixed? What annual, ongoing, or up-front fees will they charge you with? To help you look around for the best rates and offers, go to websites that have a loan selector feature – you can compare rates and fees. Or, check out websites that do the grunt work of matching your needs to a loan and a provider.

5. Be honest.
Be honest why you need the loan. Whoever you’re getting your loan just may find a loan option that suits your needs better.

There are many types of private personal loans. Use these tips to help you get the loan you need!