Many borrowers do not prefer to give security to the lenders. In such cases, the lenders rely on borrower's credit history, monthly income and repayment capability.
Mostly, the personal loans do not involve any security. They are taken as unsecured loans and, therefore, you need not provide any security. Tenants and homeowners – both are eligible for such type of loans.
You can take out personal loans for many reasons. Purchasing a car, improving your home, consolidating your debts and going on holidays are some of the common instances where a borrower can rely on these types of loans. The loan amount is flexible as it ranges from £500 to £25,000 in case of unsecured personal loans. If you can provide a security to the lender, the loan amount can be further extended.
Personal loans are given to you for your personal consumption. You can use them in any way you deem fit. The maximum loan amount that you can get depends on several things like your credit history, monthly income and DTI (debt to income) ratio. The DTI ratio highlights your disposable income. In case of unsecured personal loans where no security is involved, your DTI ratio assumes a greater significance. A less than 20 per cent DTI is considered good.
Credit history reflects upon your previous experiences in dealing with the lenders. If you have been regular and punctual in repaying the instalments to your previous lenders, it means that prospective lenders can rely on you. A good credit history is always a positive aspect in your repertoire.
Personal loans are very popular in the UK financial market. By 2011, the personal loan market in UK is likely to grow further by 19 per cent. The banks and online private lenders will play a significant role. The online loan market is already well developed and a lot of lenders are offering different financial products to suit the varying needs of the borrowers.