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A personal unsecured loan means exactly what it says, a loan 'not secured' on your home, for you to spend as you would like. People often use them to pay for a new car, the holiday of a lifetime, home improvements, or even to pay off crippling credit card bills at one time, therefore allowing you to stretch the repayments over a longer term with a lower APR.
With an unsecured loan, how much can I borrow?
You can generally take out a personal unsecured loan for up to £15,000 (if you have a good credit history) however, certain unsecured loan companies can offer you up to £25,000 unsecured (if you have an EXCELLENT credit rating). Nevertheless, remember that you should have the income to make the monthly loan repayments. With unsecured loan products, you can normally get approval in principle over the telephone.
What are the maximum & minimum repayment terms for an unsecured loan?
This partly is up to the unsecured lender. A number of unsecured lenders can provide an unsecured loan for as little as twelve months, though a 5 to 7 year term is more frequent. The maximum unsecured loan term is usually 7 years but some unsecured lenders will loan over 10 years. Unsecured loans are more suitable for borrowers who want to repay something within a few years. For those who only want the money for a period of, for instance, six months, purchasing with your credit card may be better. You might have found this page after looking for any of the misspelt search phrases, for instance 'best unsecred loans', 'adverse credit unsercure loans' or even '10 year unsecure loans'. Nonetheless, the information here will prove insightful.
How does the unsecured interest rate work?
Unsecured loan interest rates are normally fixed for the duration of the unsecured loan contract, which means you know precisely how much you will repay every month. The disadvantage is that you could repay more than people who get a similar unsecured loan in 6 months' time - then again, you may very well pay less! Either way, you will not have to worry about loan repayments escalating. Many unsecured lenders will require that you arrange a direct debit for the loan instalments. Typically, the loan interest rate is lower when you take out a larger unsecured loan amount. With unsecured loans, the essential factor to check out is the Annual Percentage Rate (APR). It's also important to find out the amount the unsecured loan will cost you in total.
Do unsecured loans include a credit history check?
Yes, unsecured lenders have to be certain that borrowers represent a 'good risk' and therefore do not have a past of poor credit and overdue debts. To do this, the unsecured loan provider will check your credit history from a credit reference agency - Equifax, Experian and CallCredit plc. An adverse credit history won't necessarily stop you from obtaining a personal unsecured loan, nevertheless, chances are you will have to pay a higher unsecured loan interest rate. You might find it harder to get approved for an unsecured personal loan if you are a sole trader or if you are just starting a new employment contract.
What is an unsecured loan protection insurance?
This is an insurance plan you can take out to pay for (under certain conditions) the monthly loan repayments should your circumstances mean that you are unable to - for instance, if you have lost your job. Think with care if this is actually necessary. Unsecured loan payment protection insurance (a bundle with the loan) is often expensive and if your financial circumstances are shaky, is it wise to be borrowing more money anyway? If you do want a loan payment protection plan, look into exclusions and small print which could make it hard for you to benefit from the policy.
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