Improve Chances Of Obtaining An Unsecured Loan

An unsecured loan is precisely what it suggests, a loan 'not secured' on your house, that you can spend as you want. Many people use them to buy a new car, the holiday of a lifetime, home improvements, or maybe to pay off costly credit card debts in one go, therefore letting you to spread the installments over a longer time with a lower APR.

With an unsecured loan, how much is it possible to borrow?
You can usually take out an unsecured loan for up to £15,000 (if you have a good credit record) but a number of unsecured lenders can give you as much as £25,000 unsecured (if you have an EXCELLENT credit history). However, remember that you have to be able to afford the loan repayments. With unsecured loans, you can often be approved in principle over the telephone.

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What are the maximum & minimum repayment terms for an unsecured loan?
In part this is up to the unsecured loan company. A number of unsecured loan companies will give an unsecured loan for as little as one year, however, a 5 to 7 year term is more frequent. The maximum unsecured loan term is normally 7 years but a number of unsecured loan companies will advance an unsecured loan over 10 years. Unsecured loans are best for those who want to pay back the money borrowed over a few years. For those who only want the money for a short period, for instance, 6 months, purchasing with a credit card may be more suitable.

How does the unsecured interest rate work?
Unsecured loan interest rates are generally fixed for the length of the unsecured loan contract, which means you know precisely how much you will repay per month. The drawback is that you could repay more than others who borrow a similar unsecured loan in 6 months' time - on the other hand, you might pay less! Either way, you will not have to worry about your unsecured loan payments soaring. Many unsecured lenders will insist that you take out a direct debit for the loan payments. Usually, the loan interest charge is lower when you take out a larger unsecured loan. With unsecured loans, the critical element to check out is the Annual Percentage Rate (APR). It's also crucial to know how much the unsecured loan will cost you in total.

Do unsecured loans include a credit history check?
Yes, unsecured loan providers have to be certain that borrowers represent a 'good risk' and therefore do not have a history of bad debts and neglected debts. To do this, the unsecured loan company will request your credit history from a credit reference agency - Equifax, Experian and CallCredit plc. A bad credit record won't necessarily preclude you from obtaining a personal unsecured loan, nonetheless, chances are you will be charged a higher level of loan interest rate. You may find it more difficult to obtain an unsecured loan if you are a contractor or if you have a short term employment contract.

What is an unsecured loan insurance ?
This is an insurance cover you can get to pay (under certain conditions) the unsecured loan monthly repayments if you cannot - for instance, when you have lost your job. Evaluate with care whether you genuinely need this. Unsecured loan payment protection insurance (a bundle with the loan) is frequently costly and if your financial circumstances are unsteady, is it prudent to be going further into debt on top of it all? Should you decide you would rather have a payment protection insurance, enquire about exclusions and small print which might make it difficult for you to benefit from the policy.

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