| If you are thinking of applying for a loan, you should be | | | | of interest rates - both from high street and specialist |
| aware that there are many different loan products | | | | lenders. When advertising a loan, a financial institution |
| available and that not all people will be offered a loan | | | | will have a published headline rate (APR). According to |
| at the rate it is advertised. There are two major types | | | | an OFT ruling, this rate must be offered to at least |
| of loan: secured and unsecured. The former is only | | | | 66% of successful loan applicants. What this means in |
| granted on the basis that something valuable is offered | | | | a competitive market is that potential borrowers who |
| by the borrower as security for the loan, usually | | | | have the best credit profiles will go for the most |
| property. An unsecured loan, on the other hand, is | | | | attractive headline rates, and will usually get them. |
| given without the need for the borrower to agree to | | | | However, applicants who do not score as highly as |
| any security. | | | | the top 66% may be offered the same loan product |
| In the current climate of fierce competition and | | | | at a higher interest rate rather than be declined outright |
| aggressive lending by the financial sector, secured and | | | | by the lender. The justification for the lender to charge |
| unsecured loans tend to be very competitive in terms | | | | a higher interest rate is the level of risk involved. |