Personal Loans
A personal loan is another term for an unsecured loan. Personal Loans can be used for any purpose, such as debt consolidation, car purchase, home improvements or going on 
holiday. The interest rate is normally fixed for the length of the loan agreement, meaning that monthly payments are also fixed.
Star Loans welcomes personal loan applications from private tenants, council tenants, if you live with your parents, if you do not own a home, if you have a good or bad credit record or if you have been declined elsewhere, for whatever reason. If you are a homeowner but do not want a loan secured on your property then we can also help.
What is the difference between a personal loan and a secured loan?
A secured loan uses your home as collateral or security for the lender, so the lender is very confident that he will be repaid. The lender gains an interest in your property and has the right to repossess it in the event of loan default. For this reason, secured loans are normally available even to people with adverse credit history, provided there is sufficient equity available in their properties.
Lenders may also be relaxed about missed payments as they know that they have the legal right to recover the full amount of the debt. The advantage to the borrower is that the interest rate is normally lower than for personal loans but you risk losing your home if you cannot afford to keep up repayments.
A personal loan carries less risk to the borrower due to the fact that his/her home is not used as collateral or security for the lender.
Borrowers will not normally lose their homes if they cannot afford to keep up repayments.
When applying for a personal loan, most large lenders use credit scoring techniques to assess the creditworthiness of applicants. Consequently, applicants with a poor credit will find it more difficult to have their loan applications approved. The credit checking process means that personal loans can take longer to be approved than secured loans.
The credit check will look at factors such as your address, whether you are on the electoral or voters role, how frequently you change address, public information such as bankruptcy or CCJs and whether you have ever defaulted or fallen into arrears on past credit agreements.
Personal Loans can be issued quickly
However, when your personal loan application has been approved, it is faster to obtain than a secured loan as there is no need to value your home. Other advantages to the borrower are that personal loans can be more flexible and the borrower has greater control over the repayment profile. It is typical that the lending sum offered is restricted to less than £25,000 and the maximum loan term allowed is ten years.
Personal loans carry a higher interest rate as the lender bears more risk. Lenders may be more aggressive in chasing late or defaulted payments because they do not have the security of being able to claim your house if you don't pay back the loan.
Repayments
Loans are repaid in monthly instalments over an agreed period. This amount of time is usually fixed and if you want to pay off the loan earlier you might have to pay a penalty. The longer the repayment period, the more interest you will pay, so go for the shortest one you can manage.
Flexible loans, which let you pay back the money whenever you want, are becoming more common but the interest rate charged is often higher.
The most important thing is to make sure you know exactly what the monthly payments will be, and how much you will pay back in total.
WARNING: THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. LOANS ARE SECURED ON YOUR HOME.
