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A personal unsecured loan means exactly what it says, a loan 'not secured' on your home, for you to use as you would like. A lot of people use them to purchase a car, a dream holiday, house renovations, or maybe to clear spiralling credit card bills at one time, so freeing you to make the reimbursements over a longer term at a lower interest rate.
With an unsecured loan, how much can I borrow?
You can generally get an unsecured personal loan for up to £15,000 (if you have a good credit rating) however, a number of unsecured lenders can offer you up to £25,000 unsecured (if you have an EXCELLENT credit record). Then again, remember that you should have the financial means to make every loan repayment. With unsecured loans, you can often be approved in principle over the phone.
What are the min/max repayment periods for an unsecured loan?
In part this is determined by the unsecured loan provider. Some unsecured loan companies will offer an unsecured loan for as little as 12 months, although a 5 to 7 year term is more common. The maximum unsecured loan term is generally 7 years but a number of unsecured loan companies will lend over 10 years. Unsecured loans are more suitable for people who want to repay the loan within a few years. If you simply need the money over, say, six months, borrowing from a credit card may make more sense. In case you found this page because you misspelled your search word with spellings such as 'best unsecure loans uk', 'cheapest unsecure loans' or even 'cheapest unsecrured loan', don't panic since the info herein will prove helpful.
How does the unsecured interest rate work?
Unsecured loan interest rates are generally fixed for the duration of the unsecured loan agreement, which means you know specifically the amount you must pay back monthly. The drawback is that you could repay more than borrowers who are offered a similar unsecured loan in 6 months' time - then again, you could pay less! Either way, you have no need to worry about loan repayments escalating. Some unsecured loan companies will insist that you set up a direct debit for the loan repayments. Generally, the loan interest rate is less if you take out a larger unsecured loan. With an unsecured loan, the key factor to note is the Annual Percentage Rate (APR). In addition, it is crucial to find out the amount the unsecured loan will cost you in total.
Do unsecured loan applications include a credit history check?
Yes, unsecured lenders want to be satisfied that loan applicants are a 'good risk' and therefore don't carry a history of credit problems and outstanding debts. To do this, the unsecured loan company will check your credit record from a credit reference agency - Equifax, CallCredit plc or Experian. An impaired credit record won't necessarily hinder you from obtaining an unsecured personal loan nonetheless, you will most likely be charged a higher rate of interest. You may find it harder to obtain an unsecured loan when you are self employed or if you are just starting in a new job.
What is an unsecured loan payment protection insurance?
This is an insurance you can buy to pay for (under certain conditions) the unsecured loan monthly repayments should your circumstances mean that you are unable to - for example, if you have lost your job. Consider with care if you genuinely need this. Unsecured loan payment protection insurance (a bundle with the loan) is frequently costly and if your financial circumstances are shaky, is it the best move for you to be borrowing more money anyway? Should you decide you do want a payment protection insurance, ask about exclusions and small print which might make it impossible for you to claim from the policy.
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