A secured loan is much easier to be accepted for as it’s linked to an asset you already own, such as your home or even your car. However, since you’re linking the loan to an asset, it also means that asset can be repossessed if you don’t keep up with repayments. The benefit is that the risk is lowered for the lender, so you are more likely to borrow a larger amount of money over a longer period.

In contrast, an unsecured loan is not secured against anything and can usually only be applied for if you have a good credit rating. You might not receive a rate that is as good as a secured loan, but you aren’t putting any of your assets at risk.

A personal loan is an amount borrowed from a lender that will be paid back in monthly instalments over a set period of time. It will usually be unsecured and therefore your likelihood of being accepted will be based on your credit score and financial history.

Once accepted for a personal loan, you will be free to use it as you wish, but it must be spent on a personal purchase (and not used for business). Examples include buying a new car, paying for a holiday, paying for a wedding or even to make an expensive home improvement.

Whether you have a startup business, a small to medium enterprise (SME) or a large or global corporation, if you have a good credit history then chances are you will be accepted for a business loan. It can be a great way to help a fledgling business grow from the ground up, or to assist a larger business invest and strengthen their offering.

Whilst you might not be able to gain access to the best rates if you have a bad credit rating, you can usually still apply for a bad credit loan instead. These have a much higher interest rate so can be expensive, so make sure you’re happy with the repayments prior to application.

If you would prefer to improve your credit rating instead, why not try a credit builder card instead?

A guarantor loan is where another person volunteers to act as a guarantor for finance you’re taking out. This is usually an option if you have bad credit or have been refused credit, but it does mean that if you don’t keep up with repayments, your guarantor will be liable to pay.

APR stands for Annual Purchase Rate, which will indicate how much you will pay on top of the amount you’re borrowing on an annual basis. It includes the interest rate itself, as well as any fees that are included such as an arrangement fee.

The lender will always perform a credit check, especially if you are a new customer, as they need to ensure that they can lend money to a candidate who is trustworthy enough to pay it back on time.

It all depends on your credit score. If you have a good credit score, then the likelihood is you will have access to the best interest rates and will therefore be able to apply for any type of loan and have a good chance of being accepted. Try our moneymatcher online comparison tool to find the right loan for you.

A home improvement loan can be used for many different things, including an extension project, refurbishment or to decorate a new property. The decision is up to you.