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Understanding Your Finance Options

Sometimes, we need capital that we don’t have, and borrowing is the only way to meet our bills. When we find ourselves in a situation like this, it pays to understand the various finance options that are available. Borrowing is not something to be taken lightly, and rushing into it regardless of the dangers can be risky.


So, to help you gain a better understanding of the finance options available, here’s a rough breakdown of four of the most popular borrowing options to consider:


Overdrafts are offered on the majority of bank accounts and can help you if you are looking to borrow a small amount over a short period of time.  The average overdraft will give you access to a sum between £500 and £2,500 however, you must research the terms and conditions before committing and remember if you  exceed your overdraft limit, this can have hefty costs so you may want to consider another lending option if you feel you may go over the limit.

Credit Cards

If you’ve maxed out your overdraft, the next option available is a credit card.  They’re a great way to build a positive credit history and most credit card providers will provide you with access up to £5,000 of credit, making them a useful option for those who want to borrow relatively small amounts.

Secured Loans

Secured loans, such as those offered by Nemo Personal Finance, are in some cases, a better alternative to an overdraft or credit card because the repayment term can be spread over a longer period naturally reducing your monthly repayments and the potential loan amount is greater than that of a credit card and can be up to £500,000 for some lenders. However, secured loans do have their disadvantages; they require a valuable asset to be used as security, usually your home, so you must ensure you can afford the repayments as you could lose your home. They can also be more expensive than other forms of lending as the loan is generally taken over a longer term. Still, they offer a useful solution for those who plan their finances wisely and know that they’ll be able to stick to the terms of their payment plan.

Unsecured Loans

Unsecured loans are often preferred to their secured counterparts. The reason for this is simple: should you default on your repayments you do not risk losing your home. However, they do not offer as long a repayment term or as high a borrowing amount as a secured loan lender.  Unsecured loans do have their downsides; as a rule, they’re unsuited to those with a poor credit history, and they might carry high interest rates compared to other borrowing alternatives so a secured loan may be a more suitable option.