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A personal unsecured loan is what it says, a loan 'not secured' on your assets, that you can spend as you would like. People often use them to pay for a new car, the holiday of a lifetime, home improvements, or maybe to settle spiralling credit card bills at one time, therefore allowing you to extend the installments over a longer period at a lower APR.
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) but some unsecured lenders can offer you up to £25,000 unsecured (if you have an EXCELLENT credit record). However, remember that you have to have the financial means to make the loan instalments. With unsecured loan products, you can often get approval in principle over the phone.
What are the min/max repayment periods for an unsecured loan?
In part this is up to the unsecured loan company. A number of unsecured lenders can provide an unsecured loan for as little as 12 months, although a 5 to 7 year term is more usual. The maximum unsecured loan term is normally 7 years but a number of unsecured lenders will lend over 10 years. Unsecured loans make most sense for applicants who want to pay back the loan over a few years. If you simply need the money for a period of, for example, six months, using a credit card may make more sense. A lot of people found this page with a misspelt keyphrases like 'adversre credit unsecure loan', 'find me unsecure loan' or 'consolidated unsecure loans'.
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 how much you have to pay back each month. The drawback is that you might repay more than other borrowers who are offered a similar unsecured loan in six months' time - on the other hand, you may very well pay less! Either way, you will not have to be anxious about your loan payments rising uncontrollably. A lot of unsecured loan providers will require that you arrange a direct debit for the loan instalments. Usually, the loan interest charge is less when you borrow a bigger unsecured loan amount. With unsecured loans, the critical element to be aware of is the Annual Percentage Rate (APR). In addition, it is advisable to consider the amount the unsecured loan will cost you in total.
Will I have to pass a credit check?
Yes, unsecured lenders have to make sure that you represent a 'good risk' and therefore don't carry a past of adverse credit and outstanding debts. To achieve this, the unsecured loan provider will check your credit history from a credit reference agency - Equifax, CallCredit plc or Experian. A bad credit past won't necessarily hinder you from obtaining an unsecured loan, but you will most likely be charged a higher level of loan interest rate. You might find it harder to get approved for an unsecured personal loan if you are self-employed or have a temporary employment agreement.
What is an unsecured loan payment protection insurance?
This is an insurance cover you can get to pay (under certain conditions) the monthly repayments of the loan in the situation where you cannot - for example, when you have lost your job. Think carefully whether this is actually necessary. Unsecured loan payment protection insurance (a bundle with the loan) is frequently costly and if your financial circumstances are shaky, is it prudent to be borrowing more money anyway? Should you decide you do need a payment protection insurance, enquire about exclusions and small print which might make it impossible for you to benefit from the cover.
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