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A personal unsecured loan is precisely what it suggests, a loan 'not secured' on your home, that you can spend as you want. People often use them to buy a new car, a special holiday, house renovations, or maybe to pay off costly credit card bills in a single go, so freeing you to spread the installments over a longer period with a reduced interest charge.
With an unsecured loan, how much is it possible to borrow?
You can usually take out a personal unsecured loan for up to £15,000 (if you have a good credit rating) but certain unsecured loan companies can give you as much as £25,000 unsecured (if you have an EXCELLENT credit record). However, keep in mind that you are required to have the financial means to make the monthly loan repayments. With unsecured loan companies, you can frequently get approval in principle over the phone.
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What are the maximum and minimum repayment periods for an unsecured loan?
This partly is determined by the unsecured loan provider. A number of unsecured lenders will grant an unsecured loan for as little as 1 year, however, a 5 to 7 year term is more likely. The maximum unsecured loan term is normally seven years but a number of unsecured loan companies will lend over 10 years. Unsecured loans are more suitable for borrowers who want to repay the money borrowed within a few years. For those who only need the money over, say, six months, using your credit card may make more sense. We have discovered that various internet users searching for info related to this subject also make the mistake of misspelling their search terms with spellings for instance 'cheap unsecure loans', 'first national unsecure loans' or 'cheap unsecrued loans'.
How does an unsecured loan interest rate operate?
Unsecured loan interest rates are usually fixed for the duration of the unsecured lending agreement, which means you know specifically the amount you will have to pay back per month. The drawback is that you might possibly pay more than borrowers who are offered a similar unsecured loan amount in six months' time - on the other hand, you could pay less! Either way, you have no need to be concerned about unsecured loan repayments escalating. Many unsecured loan companies will insist that you set up a direct debit for the loan repayments. Usually, the loan interest charge is smaller if you borrow a larger unsecured loan. With unsecured loans, the crucial point to be aware of is the Annual Percentage Rate (APR). Additionally, it's important to find out how much the unsecured loan will cost you in total.
Do unsecured loans include a credit score check?
Yes, unsecured loan providers need to be satisfied that borrowers are a 'good risk' and therefore do not have a history of credit problems and overdue debts. To achieve this, the unsecured loan company will get your credit record from a credit reference agency - Experian, CallCredit plc or Equifax. A bad credit history won't necessarily prevent you from getting an unsecured loan, however, chances are you will have to pay a higher unsecured loan interest rate. You might find it more difficult to get approved for an unsecured personal loan if you are a sole trader or have a temporary employment agreement.
What is an unsecured loan payment protection insurance?
This is an insurance plan you can purchase to pay (under certain conditions) the unsecured loan monthly payments should your circumstances mean that you cannot - for example, if you have lost your job. Evaluate carefully whether this is actually necessary. Unsecured loan payment protection insurance (a bundle with the loan) is often expensive and if your financial situation is precarious, is it prudent to be increasing your debt load anyway? Should you decide you would rather have a payment protection insurance, look into exclusions and small print which might make it difficult for you to claim from the insurance.
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