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As an unsecured loan does not use any of your home for security (different than a secured loan where, if you do not meet monthly repayments, lenders could legally sell your home), it is a viable option for people wanting to borrow. Different from secured lending, unsecured loans do not hold your home as security to ensure that the lender will get their money.
On the other hand, because that financial protection is not in place for the lender, with some unsecured loans, slightly higher interest rates could be charged than those for secured loans.
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Unsecured loan products are considered more appropriate for those who are not in the market for big loans - typically an unsecured loan might extend to the £15,000 level, however, each lender establishes their own rules and restrictions as to how much they will lend you.
Just like secured loans, they can be used for almost anything (with some restrictions) and you are the one to determine the length of time for paying back the loan. Generally, you will be offered the option of repaying the loan within 6 - 120 months, so it is important to thoroughly evaluate first to see how much you can comfortably afford to repay every month.
As the lending requirements are different when taking an unsecured versus secured loan, you may find it difficult to get an unsecured loan. However, in most cases, there are sympathetic unsecured lenders who will be able to help you and offer you an unsecured loan.
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