Britons today are borrowing more money than at any other time in our history. With such huge sums being borrowed on personal credit, UK banks are acutely aware of the potential for huge profits. However, unlike the days of past, in todays market banks need to be ever more innovative with the marketing of their loan schemes if theyre going to have any chance of capturing your potential loan business. So, what type of UK loan do you have?

Nearly every single loan in the UK will still fall within one of two very broad classifications what is known as a secured loan, or, alternatively, an unsecured loan. With a secured loan, you, as the borrower, agree to provide the bank, as the lender, with security to give the bank some assurance that theyll be repaid the money you borrow. Generally, in exchange for agreeing to give the bank this security, the bank will agree to offer you a marginally lower rate of interest on the borrowing than you would otherwise have been charged on an unsecured loan. As such, the traditional types of secured loans youll find on offer include home mortgage loans, home improvement loans, re-mortgage loans, home equity withdrawal loans, and, in some cases, car loans. Just as all of these can be unsecured (although in some cases, such as a home mortgage loan, this would be rare), its also possible to have a secured loan that doesnt exactly fit any of these either.

Unlike secured loans, with an unsecured loan you do not agree to give security over an asset in return for borrowing money from the bank. As such, if you fail to repay the loan, the bank effectively risks losing all of the money it lent to you. Because of this, the bank will normally charge higher rates of interest on an unsecured loan. Also, in most cases, the amount being lent to you is smaller than you can usually borrow with a secured loan. Typical types of unsecured loans include the standard personal loan, holiday loans, student loans, payday loans, and, in some cases, debt consolidation loans.

While the general parameters of what constitutes a loan remain the same, what is changing on an almost daily basis is the names being given to these loans as banks try various different ways for you to sign up to their latest loan promotion. And this is one practice that banks have implement that you can be sure will not change in the near future. But before you agree to complete the UK loan application form, take the time to make sure you know whether youve just signed up for a secured or unsecured loan, as this could have a very important impact on what happens if youre ever in the position where you cannot repay the loan.