What are unsecured loans? An unsecured loan is a debt obligation which is not backed by the pledge of specific collateral unlike a mortgage where your house is collateral against the loan.
Get Approved For Unsecured Loans
People with bad credit may be eligible for unsecured loans as well.
Unsecured loans differ from secured loans by the fact that they in theory provide less risk to the person taking out the loan, due to the fact that their house is not used as insurance on their payments.
Whilst this is true in theory, it is common that once someone who has taken out an unsecured loan defaults on their payments, they will have court proceedings taken against them and their home.
This could in effect result in the loss of their home well on down the line, turning what was once a less risk loan into a secured loan!
Be extra careful to ensure that you can keep up the payments on these unsecured loans.
Unsecured loans companies often act aggressively on payment defaults to ensure the stability of their investment.
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What exactly are unsecured personal loans?
An unsecured personal loan is a comparatively small, fixed rate loan that is taken out for personal use.
Personal loans are often for amounts ranging between 500 and 25,000.
Eligibility for this kind of personal loan is based upon the credit history of the borrower because an asset does not secure the lending.
This may determine the APR based on the level of danger he presents to the lending company.
Reasons to decide on unsecured loans
Modest value purchases – unsecured loans are better suited to small amounts of borrowing as they are normally set in a fixed interest rate over a fixed repayment term.
You’re not a homeowner – unsecured loans are the only real choice as the property is not yours to guarantee any borrowing against, should you lease your property.
Finest candidates for unsecured loans
People that have credit ratings that are good – The risk is made together with the bank because the borrowing is not secured against an asset.
Financing with prior proof of good financial management to someone lowers the danger to the lender.
Those people who have resided in the exact same address for a very long time – This enhances the credit score needed to receive the unsecured loans.
Those individuals who have job protection – Candidates using a risk-free job do have more possibility of making continued repayments thereby lowering the risk to the bank.
Those who have a good relationship with their bank – Existing customers often get preferential personal loans from the lender with whom they hold a current account.
Considerations of unsecured loans
Lenders still have the legal right to recover the cash should payments not be made, although your property isn’t at risk using unsecured loans.
In cases where the debt that is outstanding is not low, you may be taken by the lending company to court. This is expensive, and you will have to cover these costs.
In extreme circumstances, the court can rule your home or property has to be sold so as to repay the debt. In addition to this, the court has got the ability to make you break as a consequence of non-repayment of loans that are unsecured.
What are unsecured loans all about?
These type of loans, as the name suggests, is not secured against anything.
This means if the borrower fails to keep up with their repayments the lender has nothing to use as security to regain the debt that has not been paid.
What type of unsecured loans are there?
On the market there is a wide range of loans that come under the umbrella of being known as an unsecured loan.
They can be in the shape of personal loans, payday loans, guarantor loans, business loans, home improvement loan, debt consolidation loan, the choice is immense.
How much can you borrow with unsecured loans?
With an unsecured loan you typically can borrow up to £25,000, depending on who you borrow from and depending on what your credit rating is like.
If you have a poor credit rating you may find it difficult to be accepted for an unsecured loan due to the fact the lender may see you as more of a risk to keep up with the repayments.
In this case a payday loan maybe an ideal option as it is for a small cash amount and is borrowed over the short term.
What can you use your unsecured loans for?
Depending on the type of loan you apply for depends on what you can use the loan for. If you are going for a standard personal loan you can use the money for whatever you require.
It could be used to buy a car, pay off some debts, do some home improvements, to buy a large purchase, or treat yourself to a holiday, or even use the money for all of these.
As long as you are able to make your repayments for the full term of the loan then you can spend the money you borrow for whatever you wish.
What is the application process like for unsecured loans?
The application form is required to be completed before being considered for a loan.
This form will ask personal information about the applicant, such as, name, date of birth, address, home status, marital status, any dependants, what your work status is, and your income.
Depending on the information provided and after a credit check being carried out it will depend on whether the applicant will be accepted or not.
However, if you find that you are struggling to get accepted for the loan you need we have access to a selection of lenders that will accept applicants with less than perfect credit scores. Click on the banners on this page to be redirected to their page.