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A personal unsecured loan means exactly what it says, a loan 'not secured' on your house, for you to use as you would like. Many people use them to purchase a car, a special holiday, home improvements, or even to pay off spiralling credit card bills at one time, so letting you to spread the instalments over a longer time at a lower APR.
With an unsecured loan, what amount can I borrow?
You can normally take out an unsecured personal loan for up to £15,000 (if you have a good credit rating) but some unsecured lenders can grant you as high as £25,000 unsecured (if you have an EXCELLENT credit history). Nonetheless, remember that you should have the financial means to make every loan repayment. With unsecured loan companies, you can often be approved 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 company. A number of unsecured loan companies can provide an unsecured loan for as little as one year, however, a 5 to 7 year term is more frequent. The maximum unsecured loan length is generally seven years but a number of unsecured lenders will lend over 10 years. Unsecured loans make most sense for borrowers who want to pay back the money borrowed over a few years. If you simply want the money for a period of, for example, six months, purchasing with a credit card may be cheaper. In their search to find info about this subject, plenty of people have mistakenly typed in misspelt keyphrase like 'compare unsercured loans', '30 000 loan' or even 'adverse credit unsecued loans'.
How does an unsecured loan interest rate operate?
Unsecured loan interest rates are usually fixed for the duration of the unsecured loan agreement, which means you know precisely how much you will repay every month. The drawback is that you might pay more than people who get a similar unsecured loan amount in six months' time - on the other hand, you could pay less! Either way, you do not have to be concerned about your loan payments soaring. A lot of unsecured loan companies will insist that you agree to a direct debit for the loan repayments. Generally, the rate of interest is less when you take out a larger unsecured loan. With unsecured loans, the crucial point to be aware of is the Annual Percentage Rate (APR). In addition, it is essential to be aware of the amount the unsecured loan will cost you in total.
Will I have to pass a credit check?
Yes, unsecured loan providers want to make sure that borrowers represent a 'good risk' and therefore don't carry a record of poor credit and overdue debts. To achieve this, the unsecured loan company will obtain your credit history from a credit reference agency - Experian, CallCredit plc or Equifax. A poor credit record will not automatically hinder you from obtaining a personal unsecured loan, but you will most likely be charged a higher level of loan interest rate. You might find it harder to get an unsecured loan if you are a sole trader or have a temporary employment agreement.
What is an unsecured loan insurance ?
This is an insurance you can take out to pay (under certain conditions) the monthly repayments of the loan in the situation where you are incapable of doing so - for instance, when you have lost your job. Think carefully whether you really require this. Unsecured loan payment protection insurance (a bundle with the loan) is often costly and if your financial position is unsteady, is it the best move for you to be going further into debt on top of it all? If you would rather have a payment protection insurance, check out the exclusions and small print which could make it hard for you to claim from the plan.
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