Unsecured loans, also known as
personal loans, do not require the borrower to pledge any assets as collateral (as is the case with a
Homeowner Loan or
Secured Loans). Due to this, there is more risk involved for the lender and as such it is often more difficult to obtain an unsecured loan. A lender will look at your borrowing history, personal details, credit history, outstanding debts and annual income to determine whether you qualify for such a loan. It is important that the lender can see evidence of a good credit history and sufficient earnings to keep up regular repayments on the loan.
Unsecured loans usually come with highest
interest rates due to the bigger
risk for the business lending the money, but lenders are usually quick to offer them and funds can often be made available 24 or 48 hours after the application has been accepted. An unsecured loan will typically have a
fixed term and a
fixed rate and is usually repaid in monthly instalments. Some lenders allow penalty free early repayment, and some allow payment holidays whereby the borrower is excused repayment for a particular time period, typically a few months. As the size of loan is much smaller than a secured loan, the
repayment term is generally shorter, typically 5 – 10 years.
An unsecured loan can usually be obtained for any purpose including
debt consolidation. Although it is perhaps more beneficial for those with
bad credit to release some of their home equity with a secured loan for this.
Despite not securing property on an unsecured loan, it is still vital that monthly repayments are met. It is possible that court action taken to recover outstanding balances will take your assets into account.
To get a UK unsecured loan here at 123-Approved is both fast and efficient. Just by filling in one short form, we’ll compare over 90% of the market lenders to find the best deal for your individual circumstances. It takes just 2 minutes to get 123-Approved!
