|
 |
|
 |
|
 Money
Page > Loans
> Unsecured Loan - UK Guide
 In a
nutshell
A loan that can be taken out without any
collateral or guarantee.
Best
Loan for
Tenants, other non-homeowners, people
that do not wish to use their property as security against
loan finance.
Loan
Amounts
Most lenders will put a cap on the
borrowings you can make for unsecured loans (i.e. up to
£25,000, for example). Most minimum amounts start at around
the £1,000 mark but it is possible to borrow less than this.
It is also possible to find certain lenders that will allow
you to borrow more if you shop around. Actual loan amounts
will vary from lender to lender and will probably be based on
your income, outgoings and a credit rating.
Loan
Period
Most unsecured loans run from 12 months to
approximately 6-7 years on average. Again, it's possible to
negotiate either way with some lenders.
Loan
Advantages
Unsecured loans are quick and easy to
arrange and are the best option for tenants and other people
that don't own their own property as no security is required.
They can also suit homeowners that don't wish to use their
property as security - here you can take out a loan that won't
put your home at risk if anything goes wrong with your
finances.
What to
look out for
Although you don't have to put your
property up as security for an unsecured loan, you need to be
aware that it can still be at risk if you have problems making
repayments. If you stop repaying, then your lender can still
take legal action to have any of your possessions/property
repossessed to get their money back. You can take out a
payment protection scheme to protect against some
eventualities when you take out your loan - but this will add
to your costs overall. Unsecured loans don't give lenders that
much security - so you'll be charged higher rates here. You
may also find that some unsecured loans aren't hugely
flexible. You should ideally be looking for overpayment
permissions, no early repayment penalties and things like
payment holidays - but you won't get it with every lender. It
can also be harder for some people to get accepted for an
unsecured loan. As you have no security to offer, your lender
will credit check you to see how you manage financially. If
your credit rating is bad then you may find that your
application is rejected or that you are charged higher rates -
these will rise depending on how bad your credit rating
actually is. And, your rates may well go up as well if you
want to borrow higher amounts.
Alternatives
If you
are a home owner then you can look at a secured loan with
lower interest rates as an alternative. If you don't own your
own property, then you have few other options here.
|
|
 |
|
 |
|
|