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An unsecured loan means exactly what it says, a loan 'not secured' on your property, for you to use as you wish. Many people use them to get a car, a special holiday, home improvements, or even to clear spiralling credit card bills at one time, thus giving you freedom to make the instalments over a longer term with a smaller interest rate.
With an unsecured loan, how much is it possible to borrow?
You can usually get an unsecured personal loan for up to £15,000 (if you have a good credit rating) however, some unsecured lenders can grant you as high as £25,000 unsecured (if you have an EXCELLENT credit record). Nevertheless, don't forget that you must be able to afford the loan instalments. With unsecured loan products, you can often get approval in principle over the phone.
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What are the maximum & minimum repayment terms for an unsecured loan?
This partly is determined by the unsecured lender. A number of unsecured lenders can give an unsecured loan for as little as 1 year, though a 5 to 7 year term is more likely. The maximum unsecured loan term is normally seven years but a number of unsecured loan companies will lend over 10 years. Unsecured loans make most sense for people who want to pay back the money borrowed within a few years. For those who only want the money over, for example, six months, using your credit card may be more suitable. In case you found this web page due to the fact you misspelled your search term with spellings for instance 'cheapest unsecrured loan', 'immediate loan unsecure' or 'best unsecure loans uk', don't worry since the online information herein should prove insightful.
How does the unsecured interest rate work?
Unsecured loan rates are normally fixed for the length of the unsecured lending agreement, which means you know exactly the amount you are required to repay per month. The disadvantage is that you might possibly pay more than other borrowers who are offered a similar unsecured loan amount in six months' time - then again, you might pay less! Either way, you will not have to be concerned about you unsecured loan instalments rising uncontrollably. Some unsecured lenders will request that you agree to a direct debit for the loan repayments. Generally, the loan interest charge is less if you borrow a bigger unsecured loan amount. With unsecured loans, the critical element to be aware of is the Annual Percentage Rate (APR). Additionally, it's crucial to know the amount the unsecured loan will cost you in total.
Will I have to pass a credit check?
Yes, unsecured loan providers have to make sure that loan applicants represent a 'low risk' and therefore don't carry a history of poor credit and overdue debts. To achieve this, the unsecured loan provider will check your credit file from a credit reference agency - Experian, CallCredit plc or Equifax. An adverse credit history won't necessarily stop you from obtaining an unsecured personal loan nevertheless, you will probably be charged a higher level of loan interest rate. You may find it harder to get a personal unsecured loan if you are a contractor or if you are just starting a new employment contract.
What is an unsecured loan payment protection insurance?
This is an insurance plan you can take out to pay (under certain conditions) the monthly loan repayments if you cannot - for instance, when you have lost your job. Evaluate carefully if this is actually necessary. Unsecured loan payment protection insurance (a bundle with the loan) is frequently costly and if your financial position is unsteady, is it the best move for you to be increasing your debt load anyway? If you do want a loan payment protection plan, ask about exclusions and small print which could make it harder for you to claim from the cover.
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