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An unsecured loan is precisely what it suggests, a loan 'not secured' on your property, for you to spend as you wish. People tend to use them to get a new car, a dream holiday, house renovations, or even to clear crippling credit card debts in one go, therefore giving you freedom to extend the payments over a longer time with a reduced APR.
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 lenders can grant you up to £25,000 unsecured (if you have an EXCELLENT credit history). Nevertheless, keep in mind that you have to have the income to make the monthly loan repayments. With unsecured lenders, you can normally get approval in principle over the phone.
What are the min/max repayment terms for an unsecured loan?
This partly is determined by the unsecured loan company. Some unsecured lenders will grant an unsecured loan for as little as 1 year, though a 5 to 7 year term is more common. The maximum unsecured loan length is normally seven years but a number of unsecured lenders will advance an unsecured loan over 10 years. Unsecured loans make most sense for applicants who want to pay back a purchase within a few years. For those who only need the money over, for instance, 6 months, borrowing from a credit card may make more sense. It can interest you to find out, as you read this helpful article, that plenty of people make the error of typing 'ccj insecured loan', 'cheap unsecrued loans' or '60 000 loan unsecure' while trying to obtain online content related to to this topic.
How does the unsecured interest rate work?
Unsecured loan APRs are normally fixed for the duration of the unsecured lending agreement, which means you know exactly the amount you will pay back every month. The drawback is that you could pay more than others who take out a similar unsecured loan in 6 months' time - on the other hand, you might pay less! Either way, you will not have to be anxious about you unsecured loan instalments shooting up. A lot of unsecured loan companies will insist that you agree to a direct debit for the loan payments. Generally, the loan interest rate is lower when you take out a larger unsecured loan amount. With unsecured loans, the most important point to note is the Annual Percentage Rate (APR). In addition, it is essential to be aware of the amount the unsecured loan will cost you in total.
Will I have to pass a credit check?
Yes, unsecured lenders need to ensure that loan applicants are an 'acceptable risk' and therefore don't carry a history of bad credit and outstanding debts. To accomplish this, the unsecured lender will get your credit history from a credit reference agency - CallCredit plc, Equifax or Experian. A poor credit past won't inevitably prevent you from obtaining an unsecured personal loan but there is a good chance you will have to pay a higher unsecured loan interest rate. You might find it more difficult to get approved for a personal unsecured loan if you are a contractor or if you are newly employed.
What is an unsecured loan payment protection insurance?
This is an insurance policy you can buy to pay for (under certain conditions) the unsecured loan monthly repayments when you are unable to - for instance, if you have lost your job. Think carefully whether 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 prudent to be increasing your debt load on top of it all? If you do want a loan payment protection plan, enquire about exclusions and small print which might make it hard for you to claim from the insurance.
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