Unsecured Loans

What is an unsecured personal loan?

An unsecured personal loan is repayable monthly at a fixed rate of interest. Since they are not linked to any security, such as your house, the lender has no recourse but to sue you in the county courts if you do not keep up repayments.

Unfortunatley, unsecured loans can be difficult to obtain, particularly for those with an impaired credit history, who will be forced to pay a fairly high rate of interest if any willing lender can be found.

Where can I get an unsecured loan?

Personal Loans are offered by lending institutions such as banks and building societies and are available in a variety of formats, each of which may differ in the possible size, term and purpose of the loan.

Fixed or variable rate?

If you are looking for security then choose a fixed rate loan. With a fixed rate loan your repayments will never change. This type of product may be available on an interest-only or capital plus interest basis and can normally be used for any purpose.

Variable rate loans are cheaper and if the lender reduces their lending rate of interest your repayments should decrease, whereas those on a fixed rate would not benefit. Of course market forces may lead the lender to increase their lending rate, thus increasing your repayments.

What happens if I get in trouble?

Personal loans are repayable on a monthly basis at a fixed amount. However, some lenders offer the option of over-payments or under-payments that could assist you depending on your current personal circumstances.

Unsecured loans are usually offered at higher rates than secured loans and have lower borrowing amounts.

Examples of Unsecured Loans:

• Personal Loans
• Personal Lines of Credit
• Student Loans
• Some Home Improvement Loans