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An unsecured loan is what it says, a loan 'not secured' on your assets, that you can use as you would like. People often use them to buy a car, a special holiday, home improvements, or possibly to settle crippling credit card bills at one time, thus freeing you to extend the installments over a longer period with a reduced APR.
With an unsecured loan, how much is it possible to borrow?
You can usually take out a personal unsecured loan for up to £15,000 (if you have a good credit rating) however, some unsecured lenders can offer you up to £25,000 unsecured (if you have an EXCELLENT credit record). Nonetheless, bear in mind that you must have the financial capacity to meet every loan repayment. With unsecured loan products, you can frequently get approval in principle over the telephone.
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What are the maximum and minimum repayment periods for an unsecured loan?
In part this depends on the unsecured loan company. Some unsecured loan companies could grant an unsecured loan for as little as one year, though a 5 to 7 year term is more likely. The maximum unsecured loan term is typically 7 years but certain unsecured lenders will loan over 10 years. Unsecured loans are more suitable for those who want to pay back something over a few years. For those who only need the money for a period of, for example, 6 months, borrowing from a credit card may make more sense. In their search to get information about this subject, many people have mistakenly typed in misspelled search phrase for example 'bad credit unsecred loans', 'immediate unsecure decision loans' or 'best unsecure loans uk'.
How does the unsecured interest rate work?
Unsecured loan interest rates are usually fixed for the duration of the unsecured loan agreement, which means you know precisely how much you have to repay every month. The drawback is that you could repay more than other borrowers who take out a similar unsecured loan amount in six months' time - on the other hand, you could pay less! Either way, you will not need to worry about your loan payments rising uncontrollably. A lot of unsecured loan providers will request that you set up a direct debit for the loan instalments. Typically, the loan interest rate is lower if you take out a larger unsecured loan. With unsecured loans, the crucial factor to check out is the Annual Percentage Rate (APR). Additionally, it's crucial to find out the amount the unsecured loan will cost you in total.
Do unsecured loans include a credit history check?
Yes, unsecured loan companies have to be certain that borrowers are a 'low risk' and therefore do not have a record of credit problems and outstanding debts. To achieve this, the unsecured lender will obtain your credit file from a credit reference agency - CallCredit plc, Equifax or Experian. A poor credit record won't necessarily hinder you from obtaining an unsecured personal loan however, chances are you will be charged a higher rate of interest. You might find it more difficult to get approved for an unsecured loan if you are self-employed or have a temporary employment agreement.
What is an unsecured loan insurance ?
This is an insurance cover you can purchase to pay for (under certain conditions) the monthly repayments of the loan in the situation where you are unable to - for example, if you've lost your job. Consider carefully whether you genuinely need this. Unsecured loan payment protection insurance (a bundle with the loan) is often costly and if your financial position is unstable, is it wise to be borrowing more money on top of it all? If you do need a loan payment protection plan, look into exclusions and small print which might make it difficult for you to benefit from the policy.
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