Before you borrow money, it's important to make sure you will be able to keep up the repayments, otherwise you could be taken to court and might even lose your home or other possessions.
These are usually for small to medium amounts of money and meant to be repaid over a short period of time from a month to a couple of years. Short-term loans are not secured on your home or car but you still have to pay them off. If you don't, or can't make the payments, the lender can go to court to try and get its money back and if you don’t pay your credit rating would be damaged. They tend to have higher interest rates than secured loans.
Money fitness tip
Don't be tempted by unregulated lenders (known as loan sharks). Their loans are very expensive and you could get into serious financial difficulty (or worse) if you take out a loan with them and can't pay it back.
Short-term loans include
These are for larger amounts of money, from about £10,000, say for home improvements and are usually secured on your home. This means the lender can repossess your home and sell it to get it's money back if you can repay. They usually come in the form of a second mortgage or secured loan.
Deciding which type of loan you need depends on how much you need and how long you want to borrow for – see Secured and unsecured borrowing compared.