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An unsecured loan means exactly what it says, a loan 'not secured' on your home, for you to spend as you wish. Many people use them to get a car, a special holiday, home improvements, or maybe to clear crippling credit card bills at one time, therefore letting you to make the repayments over a longer time with a lower APR.
With an unsecured loan, how much money can I borrow?
You can typically get an unsecured personal loan for up to £15,000 (if you have a good credit rating) but some unsecured loan companies can give you up to £25,000 unsecured (if you have an EXCELLENT credit history). Then again, remember that you should be able to afford the loan instalments. With unsecured loan applications, you can normally be approved in principle over the phone.
What are the min/max repayment terms for an unsecured loan?
This partly is up to the unsecured loan company. Some unsecured lenders can grant an unsecured loan for as little as twelve months, though a 5 to 7 year term is more usual. The maximum unsecured loan length is generally 7 years but certain unsecured loan companies will lend over 10 years. Unsecured loans are best for applicants who want to repay the money borrowed within a few years. For those who only need the money over, for example, 6 months, using a credit card may be better. You may have found this article after looking for any of the mis spelt keyphrases, like 'guarantee unsecure loans', 'guaranteed unsecures loans' or even 'ccj insecured loan'. Nevertheless, the article here should prove helpful.
How does the unsecured interest rate work?
Unsecured loan interest rates are normally fixed for the length of the unsecured loan agreement, which means you know precisely how much you have to repay each month. The drawback is that you might possibly repay more than other borrowers who borrow a similar unsecured loan amount in 6 months' time - then again, you may very well pay less! Either way, you will not have to worry about loan repayments soaring. A lot of unsecured lenders will request that you set up a direct debit for the loan instalments. Normally, the loan interest rate is smaller if you borrow a larger unsecured loan. With unsecured loans, the most significant element to note is the Annual Percentage Rate (APR). In addition, it is important to consider how much the unsecured loan will cost you in total.
Do unsecured loan applications include a credit check?
Yes, unsecured loan providers want to be satisfied that loan applicants represent a 'good risk' and therefore don't carry a past of credit problems and overdue debts. To accomplish this, the unsecured lender will check your credit history from a credit reference agency - Experian, CallCredit plc or Equifax. A bad credit history won't necessarily preclude you from obtaining an unsecured loan, but in all probability you will be charged a higher rate of interest. You might find it harder to get approved for an unsecured loan if you are self-employed or if you are just starting a new employment contract.
What is an unsecured loan protection insurance?
This is an insurance cover you can get to pay for (under certain conditions) the unsecured loan monthly repayments when you cannot - for example, if you have lost your job. Think with care if you really require this. Unsecured loan payment protection insurance (a bundle with the loan) is often expensive and if your financial circumstances are shaky, is it prudent to be increasing your debt load on top of it all? If you decide that you would rather have a loan payment protection plan, look into exclusions and small print which could make it impossible for you to claim from the insurance.
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