There are a variety of different forms of loans and purposes why they might be obtained. Most types of loans can be separated into secured or unsecured categories. A secured loan is linked to some form of collateral such as a house or a car. This allows the lender to take possession of the collateral (asset) if the loan is not repaid based on the terms. Unsecured loans are those that do not involve collateral. Borrowers are evaluated on aspects such as credit history, income, and other factors for unsecured loans. Here we will define, differentiate and provide examples of each of these types of loans.

Response Loans Limited is a well-established U.K.-based online lender. We are properly authorised according to the requirements of the Financial Conduct Authority. Our loan products are considered as short-term financial solutions that do not require a long-term commitment. Those who have past credit problems are encouraged to apply for a loan. Our underwriters may consider factors beyond only your past credit history. One key advantage to our personal loans is that you may receive the cash you need in just one-day.

Unsecured Loans

No asset is required to provide “security” for an unsecured loan. These are essentially cash loans where the balance is paid back to the lender over a defined time period. Common examples of unsecured lending included personal loans and credit cards. Lenders are potentially taking a greater risk when offering an unsecured loan. For this reason they are likely to have somewhat higher interest rates and a shorter term for paying back the balance borrowed.

Secured Loans

Lenders may reclaim (repossess) an asset that is tied to a secure loan in the event of a loan default. The reduced level of risk may allow lenders to consider offering more favorable interest rates to borrowers. Those borrowing money in this arrangement may have a longer term loan. This is the total period of time in which the loan is to be repaid. This type of loan is used in auto loans and some consolidation loans used for paying off your debts. Other common secured loans include home mortgages and some equity loans or lines of credit.

U.K. Debt Overview

Households in Britain spent roughly £900 more than their amount of income earned in 2017. This is the highest level in over 30 years. Overall consumer debt is nearly 10% higher than it was the year before. The Bank of England recently issued a warning that continued rising debt may have a negative effect on the economy. Increased borrowing is not always a sign of overall economic problems, some analysts fear lower-income households may be borrowing to cover basic expenses. Forbes reports that over 60% of those less than 30-years-old do not have a current credit card account.

Understanding Collateral

Secured loans are often for larger amounts because they are used for financing more costly items such as houses and cars. The amount of these loans is largely based on a loan to value (LTV) calculation. The LTV is expressed as a percentage that is equal to the amount of the loan compared to the total value of the collateral. For example, if a house is worth £100,000 and you borrow £70,000, your LTV ratio is 70%. Another reality to consider in secured loans is that defaulting on the agreement can have significant consequences. If the collateral is your house, you could potentially be homeless.

Pros & Cons: Unsecured Loans vs Secured

Secured Loans

  • Advantages:
  1. Typically available for larger sums for big purchases such as a home or a ca
  2. The term of the loan, or time allowed to repay the loan is likely longer
  3. In some situations those will bad credit may qualify for the loan because the lender is protected with collateral
  • Disadvantages:
  1. Places an important asset at risk in the event of failing to repay according to the terms
  2. The amount you may borrow may be limited based on loan to value (LTV) ratio

Unsecured Loans

  • Advantages:
  1. Does not directly place key assets at risk for repossession
  2. The application and approval processes may be completed very quickly
  3. Those with fair credit may still qualify
  • Disadvantages:
  1. Likely to have higher interest rates because the lender does not have an asset to recoup
  2. Are typically geared for borrowing smaller sums (amounts)
  3. More likely to have higher interest rates and/or fees

Benefits of Personal Unsecured Loans From Response Loans

A key advantage to loans from Response Loans is the ease, speed and convenience. The application process may be completed 24-hours-a-day using most electronic devices. The entire process is completed online without having to visit a local office. Our loans provide you fast cash as soon as today and require no long-term commitment. This is a much faster option than traditional banks or credit unions that may take days or weeks to approve your loan. The loan amount is repaid in instalments over a three-month period automatically. This is because we recognise that you must maintain your other financial obligations. The repayment schedule is based on your pay frequency such as on a weekly or monthly basis.

Our unsecured loan products require no collateral or guarantor to obtain approval. Our online platform now uses the latest in security technology to protect your personal and confidential data. Those with past credit concerns who have been denied elsewhere may still qualify for a loan. You benefit from working with a direct lender. As a direct lender, borrowers avoid often costly broker fees and other such “middleman” commissions. You may use the funds however you wish. We clearly disclose all interest rates and fees that you are responsible for upfront. This means that borrowers will not be subject to added fees that may have been contained in the fine print.

What are the Requirements?

  • You must have verifiable employment or an alternate source of regular income
  • Applicants must be current adult residents of the U.K.
  • Must have an active bank account in good-standing that is available for conducting electronic transactions
  • The maximum amount that may be obtained on initial loans is £125
  • Our loans carry a 0.8% daily rate of interest, a 1304.41 APR, and a fixed annual rate of 292%
  • We adhere to solid lending practices and offer loans only to applicants who are suitable
  • Our loans are designed as a short-term financial solution
  • They are not intended for those experiencing unemployment or long-term financial hardship

Fast Unsecured Loans Available Online in the U.K.

Consumers with immediate needs for quick cash for sudden expenses can apply easily and securely online. Often people find themselves in a difficult situation facing car repairs or other unforeseen problems. We are a U.K.-based lender that is compliant with all Financial Conduct Authority requirements. If you have regular employment and a bank account we may be able to approve you for an unsecured loan today. The funds may be deposited into your account just hours after approval. We exclusively offer short-term loans online. Even those who have had past credit problems may be able to obtain fast approval. We invite you to begin our quick and easy application process today!