Lending industry in the UK is expanding like anything. More and more people are taking out loans. Strong economy and rise in consumerism is making people take out loans and spend more. The need to take out a loan may arise any time.

Personal loans offer the most convenient way of raising money. You can take out a personal loan for any purpose. If you want to buy a car and you do not have sufficient money for this, you can take out a personal loan for it. A personal loan can be used to buy a new or an old car.

You can also take out a personal loan to consolidate your debt. Debt consolidation becomes a necessity when you are finding it difficult to meet your debt obligations. A low rate debt consolidation loan can be used to repay all your high rate unsecured loans. This will help you to get rid of your debt obligation.

A personal loan can also be used for home improvement. You need money for house repairs as well as renovation. Home improvement includes painting, wall papering, installing heating system and air conditioning system, adding new bathroom fixtures, building a new room, etc.

Personal loans can be used for many other purposes such as to buy a car, to pay for a holiday trip, to pay for college fees, etc. Personal loans are broadly classified as secured and unsecured. secured loans are given against a security whereas no such security is required in case of unsecured loans. The rate of interest on secured personal loans is lower than the rate on unsecured personal loans.

On the basis of mode of repayment, personal loans are of three types – installment loans, balloon loans and single payment loans. Installments loans are repaid in the form of monthly installments. The monthly installments carry both the principal and the interest elements of a loan amount. In case of balloon loans, interest is paid at regular intervals and the principal amount is repaid at the end of the loan period. In case of single payment loans, the entire principal as well as its interest is paid at the end of the loan period.