Who We Are
Welcome to Aim Guide, your number one loans guidance site! We are your ultimate loan resource website dedicated to providing complete and factual information about all the different types of loans in the UK. We are aimed at helping consumers discover the many faces of loan and make informed decisions when shopping for financial products.
Purposes of Loans
As much as possible, no one would like to carry on debt, but there can be a myriad of reasons why we are forced to do so, and most of the time, these reasons are beyond our control. Unexpected events such as sickness, disability, or unemployment can leave us financially distressed.
Most of the time, borrowing money translates to thoughts of financial shortfalls, but there could be a lot of other worthy uses of loans. You may borrow money to finance your car, your home, or to live your dreams and start your own business. You may also need a loan to pay for your education, for that long-sought vacation, or for the wedding of your dreams. The possibilities are endless. There are different types of loans for each particular need, and that’s what we’re here for, to bring you closer to them.
Types of Loans
Loans may come in many different names, but actually, they can be narrowed down in three main categories, depending on the length of the term, the presence of collateral, and the type of credit limit.
Short Term and Long Term Loans
Loans may be short term or long term, depending on the amount of time needed to pay it off. Short term loans typically last between a few weeks to a few months. These are loans that are usually small in amount, and can be repaid in just a few instalments. One of the most popular types of short term loans is a payday loan, which is bound to be repaid on the borrower’s next payday. The loan typically takes only about two to four weeks, depending on your pay schedule, and should be repaid in full.
Meanwhile, long term loans may last between one and 25 years. Usually, these are large loans that require quite some time before they can be cleared completely. Examples are homeowner loans and guarantor loans.
Secured and Unsecured Loans
A secured loan is a type of loan that is “secured” against the borrower’s asset. This means that if the borrower fails to pay, the lender can seize the collateral and sell it to cover for the outstanding balance. Examples of this are homeowner loans and logbook loans, which are loans secured against your home equity and your vehicle, respectively.
People may secure collateral against their loan if they intend to borrow a large amount, because the lender is more likely to give them the amount they need because of the security. Borrowers may also be able to negotiate for lower interest rates if there’s collateral involved. Sometimes, it may also be required to back up the loan with an asset when the individual has little or no credit history, because of the high risk to the lender.
On the other hand, unsecured loans are those loans which do not require collateral. The only requirement is for the individual to show ability to repay the loan. Because of the risk to the lender, unsecured loans are generally more expensive than secured ones.
Revolving and Instalment Loans
A revolving loan is a type of loan that has a revolving credit limit which you can use repeatedly. With revolving loans, you can borrow again and again, provided that your credit limit is not capped. The perfect example of revolving loan is a credit card. On the other hand, instalment loans are one-time loans which you need to repay in full before you can borrow again. Typically, these loans are repaid in predetermined number of equal instalments, and would simply end after full payment. Most loans fall in this category, such as student loans, small business loans, personal loans, etc.
Aim Guide aims to provide all the necessary information for the most common types of loans you might encounter, so that you will know the benefits and the catch associated with each. Just visit our site pages to find helpful resources before you start shopping for a loan.