With many personal loan products, borrowers must provide the bank or lender background on the purpose or intended use of loan funds. This is to help the lender determine if the investment or loan is a worthwhile cause. However, when borrowers secure their loans with property, or other collateral, much of the risk to the lender subsides and they become more flexible with financing.
So-called any purpose loans are loans that are literally granted to borrowers for any purpose. This means that the borrower typically needs not provide any details on the intended use of the loan in order to receive funds. Any purpose loans are generally personal loans or secured loans that offer a maximum loan amount of 250,000 pounds. Loans begin at 5,000 pounds.
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By securing a loan with property, a borrower gives the lender recourse or claim against the property in the event of non-repayment of the loan. For most lenders, this lien is a strong reason to feel confident in issuing loan funds to borrowers. This is why secured loans generally do not require as much explanation and detail during application as non-secured personal loans or products.
Any purpose loans are used for a wide variety of purposes by borrowers. Some borrowers use these loans for debt consolidation. By securing a loan, a borrower usually gets better rates and terms and some use the funds to pay off higher interest rate credit card balances or other personal loans. Many entrepreneurs rely on the loans to help them get started with their businesses. Still others use the loans as a low cost financing option to cover vacation costs, home renovations or repairs, and other major purchases.
As with all loan products, borrowers need to carefully weigh the pros and cons of any purpose loan financing before agreeing to a loan. Excellent credit borrowers generally have better access to these loans without providing information about the loan's purpose. Again, this relates to the higher risk posed to the lender when a borrower with bad credit seeks funds.
Often, even with a secured loan, a lender wants to know the purpose behind financing requests from borrowers that have shown irresponsibility with loans. If the loan is secured, there is substantial risk of loss in the event of non-repayment. Borrowers need to also consider for themselves is a loan is too risky. Taking on too much secured debt can lead to loss of property.
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