Unsecured Loans

Often also referred to as personal loans, unsecured loans are a very flexible financing product, available to the majority of people. As they do not have a requirement for the borrower to offer some form of security to guarantee the loan amount, they are not limited to only those who have the necessary capital. This means that they are available to both homeowners and tenants alike, as opposed to secured loans that can only be taken out by homeowners.

Personal loans can be used for any purpose, and as they are in most cases simple and quick to arrange, they can be a very convenient form of financing. They are suited to a wide range of uses, from paying for a new car, funding a holiday or simply tiding you over when an unexpected large bill comes along, like having to pay for an emergency plumber for example.

The borrowing limits on unsecured loans will vary from lender to lender, and may also depend on the financial standing of the borrower, but in general they will run from around one to twenty-five thousand pounds. If you require to borrow more than this upper limit, then you should take a look at secured loans as they will offer higher borrowing limits.

Repayment periods for unsecured loans can range from one to ten years in most cases, again the limits for this can and do vary depending on a number of factors. When deciding on how long to take out your loan for, you should aim to repay it as quickly as you can afford to, making sure that the monthly repayments are low enough so that you will not be financially stretched in order to meet them. Setting the repayment term is a balance, the shorter it is the more you will repay each month, but the interest you pay in total will be lessened.

The interest rates charged on unsecured loans will vary, not only from lender to lender, but also based on the borrower's circumstances and how much they wish to borrow. As a general rule of thumb, the higher the amount being borrowed, the lower the interest rate will be. Some lenders will also vary the rates depending on how long the loan will be in place for. It's unlikely that you will ever see the interest rate given for any unsecured loan, instead what you will be shown is the annual percentage rate (APR) (see APR spotlight) - this figure takes into account the interest charges as well as the other normal costs involved with the loan in order to give a true picture of the cost of the loan.

Whatever purpose you require the money for, an unsecured loan can provide a very good solution providing the amount you need falls within the wide borrowing limits, arranging such a loan can be a very simple process - doing so online can speed up the process further - and you will generally have access to the money within days of being approved.