A personal loan is generally divided into two broad sub-categories: unsecured personal loan and secured personal loan.

A secured personal loan is a loan that is secured against a collateral. In other words, the loan amount is determined by the value of the security. The standard amount one can avail with secured loans is typically £75,000. However, this is a flexible number. In the event of the collateral being of greater value than that amount, a bigger loan could be procured. The repayment term is between 25 to 30 years. With secured personal loans, one can avail relatively lower rates of interest. This is owing to the presence of a collateral. The lender can neutralize a payment default by selling off the collateral and recouping the amount. Therein lies the one big danger for the borrower.

An unsecured personal loan does not necessitate any security from the borrower’s side. There are two big advantages with this loan type. The first one is the lack of collateral. With the absence of collateral the borrower will not lose anything, even if he is to inadvertently default on the repayment. The other advantage is that unsecured personal loans are processed a lot faster, as the tedious documentation work that accompanies the secured variety is absent here. Unsecured personal loans have some disadvantages, like a shorter repayment term, higher interest rates (lenders balancing the absence of security) etc.

Personal loans can be availed through banks, lending institutions, the Internet and private lenders. Before availing any loan, the borrower should undertake adequate research and a comprehensive analysis and comparison of all loans.

The Internet is perhaps the best customer option as far as choices and practicality are concerned. The online alternative has many loans one can choose from, and there is characteristically an online application form that one can fill from the comfort of his home. Many lenders get back to the customer in as quickly as 24 hours.