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An unsecured loan means exactly what it says, a loan 'not secured' on your home, for you to spend as you wish. Many people use them to purchase a car, a special holiday, house renovations, or possibly to clear spiralling credit card debts at one time, therefore letting you to extend the installments over a longer time with a lower interest rate.
With an unsecured loan, how much money can I borrow?
You can typically take out an unsecured loan for up to £15,000 (if you have a good credit record) however, some unsecured loan companies can give you as high as £25,000 unsecured (if you have an EXCELLENT credit history). However, keep in mind that you should be able to afford the loan repayments. With unsecured loans, you can frequently be approved in principle over the phone.
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What are the maximum and minimum repayment periods for an unsecured loan?
In part this depends on the unsecured lender. Some unsecured lenders would grant an unsecured loan for as little as one year, though a 5 to 7 year term is more frequent. The maximum unsecured loan term is typically seven years but some unsecured loan companies will advance an unsecured loan over 10 years. Unsecured loans make most sense for those who want to repay something over a few years. For people who only need the money for a short period, for instance, six months, using a credit card may be better. In the event you stumbled upon this page because you misspelt your keyword with spellings like 'immediate unsecure decision loans', 'fast unsecure loan' or even 'cheap unsecure loans',don't panic since the info in this web page will prove to be insightful.
How does the unsecured interest rate work?
Unsecured loan interest rates are usually fixed for the length of the unsecured loan agreement, which means you know precisely the amount you will have to pay back every month. The drawback is that you could pay more than borrowers who get a similar unsecured loan in six months' time - then again, you might pay less! Either way, you will not need to worry about your loan instalments increasing. Some unsecured lenders will insist that you arrange a direct debit for the loan instalments. Generally, the rate of interest is smaller if you borrow a bigger unsecured loan amount. With unsecured loans, the most significant point to look for is the Annual Percentage Rate (APR). In addition, it is important to know the amount the unsecured loan will cost you in total.
Will there be a credit check?
Yes, unsecured loan providers need to be certain that you are an 'acceptable risk' and therefore do not have a history of credit problems and unpaid debts. To do this, the unsecured loan company will get your credit history from a credit reference agency - Equifax, Experian and CallCredit plc. A poor credit past won't necessarily hinder you from getting an unsecured loan, but chances are you will get an offer with an increased rate of interest. You might find it harder to get approved for a personal unsecured loan if you are a sole trader or if you are newly employed.
What is an unsecured loan protection insurance?
This is an insurance cover you can buy to pay for (under certain conditions) the unsecured loan monthly repayments if you are incapable of doing so - for instance, if you have lost your job. Evaluate carefully if you really need this or not. Unsecured loan payment protection insurance (a bundle with the loan) is often costly and if your financial position is unsteady, is it wise to be going further into debt on top of it all? If you decide that you would rather have a loan payment protection plan, check out the exclusions and small print which could make it difficult for you to benefit from the policy.
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