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As an unsecured loan is not linked to the equity in your home (unlike a secured loan where, if you do not meet monthly repayments, lenders could legally sell your home), it is a frequent choice for people wanting to borrow. Unlike secured loans, unsecured loans do not use your property to be held as security against your loan.
Nevertheless, due to the lack of financial security for the lender, with some unsecured lending, lenders could apply a higher APR than lenders would with secured loans.
Unsecured loan products tend to be suitable for people who don't want to borrow large amounts - normally an unsecured loan could amount to £15,000, but the quantity of the loan is established and limited by the individual lending institution.
Just like secured loans, they can be used for almost anything (with some restrictions) and it's up to you to decide the period to pay it back. Normally, you will be offered the option of repaying the loan within 6 - 120 months, so it is imperative that you always do your calculations prior to commitment and see exactly how much you can afford to repay each month.
As the lending requirements are different when applying for an unsecured versus a secured loan, you may have more difficulty getting an unsecured loan. However, most of the time, there are sympathetic unsecured loan companies who will help you in your efforts to acquire an unsecured loan.
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