Unsecured Loan
If you are not in the position to be able to offer any assets
as security, such as a house, then an unsecured loan is the
only option available to you. Even if you do have a house to
use as security, you may find this type of loan to be your best
option, especially if you wish to borrow a small amount. Why
not take a couple of minutes to fill out our free, no obligation
application form to see whether we have a loan with the rates
and repayment scheme to suit your needs.
An unsecured loan does not require you to provide collateral,
as security should you default on payments, this type of loan
represents a greater risk to the lender of not being able to
collect the full amount and so the charges on an unsecured loan
are greater than on a loan, which is secured against some form
property. The reasons behind this higher APR (Annual Percentage
Rate) is that the lender has no guarantee that the money will
be repaid, and so they cover their outlay by taking out insurance
policies to underwrite the amount lent, as this insurance costs
them money they have to increase the premiums to cover this.
The main advantage of choosing an unsecured loan is that you
are not putting your property at risk if you are unable to meet
the payments, meaning that your home will not necessarily be
under threat if you run into problems.
In most cases, the amount that you will be able to borrow with
an unsecured loan will be lower than is offered with a secured
loan, making unsecured loans more suitable for smaller purchases,
and they will often have a shorter repayment term (although
the period of the loan can be up to ten years in some cases).
In typical cases, the longer the repayment term the higher the
total amount you will pay due to the fact that the charges are
calculated based on an annual percentage rate of the amount
borrowed, so the longer the term the more interest there is
to pay. The rate of interest often depends on the amount being
borrowed – the higher the amount being borrowed the lower
the interest rate will be.
You may find that the amount you will be able to borrow depends
on your previous credit history, if you have run into problems
in paying creditors in the past you may well have a poor credit
rating, if this is the case you may have to opt for a secured
loan in order to be accepted.
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