Secured Loan Company. Why Secured Loans Are Cheaper

A personal unsecured loan is what it says, a loan 'not secured' on your property, that you can spend as you wish. People tend to use them to purchase a new car, the holiday of a lifetime, house renovations, or possibly to pay off spiralling credit card debts in one go, so allowing you to stretch the instalments over a longer term with a lower interest charge.

With an unsecured loan, how much money can I borrow?
You can typically get a personal unsecured loan for up to £15,000 (if you have a good credit record) however, a number of unsecured lenders can grant you as high as £25,000 unsecured (if you have an EXCELLENT credit record). However, don't forget that you must have the income to meet the loan instalments. With unsecured loans, 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?
This partly is up to the unsecured loan provider. A number of unsecured loan companies can grant an unsecured loan for as little as 1 year, although a 5 to 7 year term is more common. The maximum unsecured loan length is normally seven years but certain unsecured loan companies will loan over 10 years. Unsecured loans are suitable for applicants who want to repay something within a few years. If you simply need the money for a short period, for example, 6 months, borrowing from your credit card may be better.

How does an unsecured loan interest rate operate?
Unsecured loan APRs are usually fixed for the duration of the unsecured loan agreement, which means you know exactly how much you must pay back per month. The disadvantage is that you could potentially pay more than people who borrow a similar unsecured loan in six months' time - then again, you might pay less! Either way, you have no need to worry about your loan payments increasing. A lot of unsecured loan providers will require that you arrange a direct debit for the loan repayments. Normally, the loan interest charge is less when you take out a bigger unsecured loan amount. With unsecured loans, the most important element to be aware of is the Annual Percentage Rate (APR). It's also essential to find out the amount the unsecured loan will cost you in total.

Do unsecured loans include a credit check?
Yes, unsecured loan providers need to ensure that borrowers represent a 'low risk' and therefore do not have a history of bad debts and outstanding debts. To ensure this, the unsecured lender will get your credit history from a credit reference agency - Equifax, CallCredit plc or Experian. An impaired credit history won't inevitably hinder you from obtaining an unsecured loan, however, there is a good chance you will be charged a higher level of loan interest rate. You may find it harder to obtain an unsecured loan when you are self employed or have a temporary employment agreement.

What is an unsecured loan protection insurance?
This is an insurance you can take out to pay for (under certain conditions) the monthly repayments of the loan in the situation where you cannot - for example, when you have lost your job. Evaluate with care if you really need this or not. Unsecured loan payment protection insurance (a bundle with the loan) is often expensive and if your financial position is shaky, is it wise to be going further into debt anyway? If you decide that you do want a loan payment protection plan, ask about exclusions and small print which might make it hard for you to benefit from the insurance.

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