An unsecured loan, or a personal loan as it is often called, is the type of loan that most people take out when paying for a car, new kitchen, holiday etc. With this type of loan, a bank or building society will lend you an amount ranging from £1000 to £25,000 over one to seven years. Both the monthly payments and interest are fixed over the period of the loan, so there are no surprises along the way. If you want to pay off your loan early then your lender may charge you – check this out before applying.
When looking for an unsecured loan the main way to compare is usually by interest rate. Be aware that the advertised rate may not be the rate you are offered though – this may be down to your credit rating or the amount you want to borrow (generally, the larger amount the lower the rate). There are many products out there, some similar, some very different. Simple Financial Solutions can decipher it all in order to present you with the best unsecured loans on the market, meaning you don’t have to lift a finger.
Is an unsecured loan right for you?
If you wish to make a significant purchase then an unsecured loan would be a good way to come up with the funds. Don’t blindly apply for one though; make sure you can afford the monthly repayments first as, although your home would not normally be at risk, you could still be hit with a hefty legal bill. In terms of eligibility, unlike a secured loan, you don’t need to own a property to take one out. You should also be eligible for the best, advertised rates if you have a good credit history as the lender will be confident that you can meet the repayments. As the loans are unsecured, companies are particularly cautious about who they lend money to – hence they can often be tricky to secure.
Are there different types of unsecured loans?
Yes, there are two main types:
- Fixed personal loans: These are the most common type and mean the total interest payable is divided evenly over the term of the loan. As interest rates are also fixed your monthly repayments will always be the same meaning you can plan ahead and indeed work out whether you can afford the loan in the first instance. Look out for repayment holidays and early repayment charges.
- Flexible loans: These are less common and allow you to specify a maximum borrowing amount without taking all of the funds at once (therefore you only withdraw the amount that you need, and only pay interest on this amount). These are useful when paying for long-term, variable projects.
As an add-on to unsecured loans, some providers offer optional Payment Protection Insurance (PPI). This will cover your loan repayments if you are unable to due to sickness or unemployment. PPI has been widely mis-sold in the past however now, you should be able to make a conscious decision whether to take it out or not and pay a little extra on top of your loan repayment.
So what now?
Please note: Simple Financial Solutions does not provide any assistance for Loans of any type at this time, these pages are for information only. Please check back soon.