An unsecured personal loan allows customers to borrow up to £25,000 without giving the lender the security of your home against the loan, and don't require any surety for the loan. Unsecured loans are not available for business purposes.
Lenders usually require repayments to be made on a monthly basis. One of the advantages of an unsecured loan is that they tend to be on a fixed rate, so no matter what changes happen to UK interest rates, your loan repayments will not be affected and you will always repay the same amount each month. It really pays to shop around for an unsecured personal loan so that you get the best rate. Because your loan is not secured against your property, your home is not automatically at risk if you fail to make a repayment.
Unsecured loans are generally offered with a repayment schedule between one and ten years. Loans tend to be cheaper if you take them out over a shorter repayment period, so keep an open mind to shorter repayment periods if you can as it may save you money in the long run. Although shorter loan terms tend to come with a higher APR (Annual Percentage Rate) than longer term loans, think about the total you will be repaying over all. It may save you money in the long term to get a shorter payment term with a higher APR.
Unsecured loans are not without their risks. If you fail to keep up the payments on your loan, you could risk being taken to court by the lender. Your home could still be at risk as a result of your unpaid debts because your lender could force you to sell your property to repay your debt. Failure to keep up repayments could also lead to you incurring CCJs (County Court Judgment). A CCJ could order you to pay off your loan in smaller monthly installments and will affect your credit rating.
Comparing APR's of unsecured loans is a good place to start shopping around for the best deal. It is worth noting that lenders have to advertise typical APR. Typical APR is the rate they offer to 66% or more of their customers, and is not necessarily the APR they offer everyone. Other things to consider before applying for an unsecured loan are what you realistically need to borrow for your purposes, and what you can afford to repay.
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