Unsecured Loans
An unsecured loan is a great loan product that can be used for funding various things. If you need to trade your old car in and need to finance buying a new one then you can use this type of loan. Alternatively, if it’s home improvements that are needed or even a luxury holiday, an unsecured loan can be the finance you are looking for to pay for these treats.
Unsecured loans are loans that are issued by a lender without you having to secure your assets against the loan, such as your home. Lenders can also term Unsecured Loans as “Personal Loans”.
Most people are now conversant in using the internet and a vast amount of customers have access to a computer. It has therefore, become the norm to apply for loans online. If you choose to apply for a loan using this method, the lender will perform a credit check on you using their individual credit scoring system. Whether you choose to apply via the internet, in a branch or via the telephone, all applications will be assessed in accordance with the relevant credit checking system. Applications made via the internet usually give you an instant decision on whether the application has been successful. If the application is approved, most lenders can transfer the money to you within a matter of days.
If you feel that you need to discuss your loan options in more detail, visiting your existing lender to discuss your requirements may be the best option for you. They will be able to arrange a meeting between you and their financial advisor. Going with your existing lender as a loan provider could offer you a better deal on interest rates if you take the loan out with them. They may also be able to arrange the unsecured loan without charging a fee to you.
Unsecured Loans are offered with an interest rate that is termed as “APR” (Annual Percentage Rate); the APR is the lenders way of calculating the cost of lending the loan to you. A “Typical APR” will be quoted at the time of application, however, once the application has been processed and the loan has been agreed then you will be notified of the actual “APR” that is going to be used to calculate the monthly repayments.
When the “APR” has been finalised by the bank, the rate will not change as this is the set “APR” for the life of the loan. The APR will be fixed by the lender for the duration of the loan; therefore, your monthly repayments will not change from month to month.
Depending on lender, most loans will be offered over a repayment period of one to five years, however, if a larger amount is being borrowed then the repayment period can be extended to ten years.
When you are approved for the relevant loan, you can opt to purchase a Personal Payment Protection plan. This works in much the same way as an insurance policy whereby for a monthly fee, you will be covered from repaying your monthly loan instalments should you lose your job involuntarily, be involved in an accident or suffer from an illness which would cause you not to be able to work for a period of time.
Unsecured loans are often a cheaper way of borrowing compared to secured loans, providing that you have a decent credit score. You can usually borrower larger sums of money, usually over a 1 to 10 year period; sometimes the loan period may be lower than that depending on individual lenders criteria.
You should always be aware that the larger the amount of loan and the greater the repayment period will mean the overall interest to be repaid will be greater.
If you have the opportunity to repay the loan earlier than the agreed period, penalties may be imposed by the lender.
Apply now for an unsecured loan with our parent site Loans
UK, or view our recommended
list of unsecured loan specialists.
|
