Unsecured Loans, Personal Loans, Un-Secured
Loans
A Guide to Unsecured
Personal Loans
Unsecured personal loans are offered by lending institutions
such as banks and building societies and are so called because
the lender requires no security for the debt. They are not
available for speculative purposes or business purposes. Depending
on the individual lender some other purposes may also be excluded,
for example the purchase of timeshare property. Below is a
quick and easy guide to UK personal loans.
to begin the process of applying for a Personal
Unsecured Loan
Choosing the right loan
Personal loans are available for a range of different amounts
and repayment terms. Depending on the amount and purpose of
the loan, you will be able to choose from a range of repayment
periods. Larger loans such as those over £10,000 can
usually be taken over longer terms i.e. 7 to 10 years. The
minimum loan amount is typically £1,000 although some
lenders do offer £500 and upwards. The maximum amount
you can lend is £25,000, although this will vary between
lenders and products.
The amount borrowed is subject to an interest charge, and
the interest rate applied is known as the Annual Percentage
Rate (APR). Generally, it is advisable to compare the APRs
of different products as a means of determining how competitive
they really are. It is not unusual for lenders to offer different
APRs depending on the method of application e.g. applications
by telephone may receive a higher APR than those done online,
so it's well worth shopping around for the best deal.
If you are looking for a low cost loan, comparing the APR
is a good place to start. Lenders do quote interest rates
in different ways, and it's worth familiarising yourself with
these before you start:
to begin the process of applying for a Personal
Unsecured Loan
A fixed interest rate will stay the same throughout the term
of the loan, regardless of any changes in the bank base rate.
This means your monthly repayments should always stay the
same, allowing you to budget accurately.
A variable interest rate may rise and fall in line with any
changes to the bank base rate. This could result in your monthly
repayments changing during the term.
In addition:
A typical interest rate is an indication of the rate you
will be offered as it is the rate that over 50% of successful
applicants receive. The exact rate offered to you will be
dependent on the loan amount and term and on an assessment
of your personal circumstances.
A set interest rate is offered to all successful applicants,
regardless of the risk they present and the loan amount and
term.
Although lowest APR is one factor that contributes to a 'cheap'
loan, you should always pay attention to the small print as
any additional costs will be found there. Some lenders do
apply an early settlement charge (also known as a redemption
penalty) if the debt is repaid in full before the agreed end
date. This can be up to 2 months interest so it pays to check
this out before you commit. If you think you'll clear the
debt before the end of the term then your best bet will probably
be a loan with no early settlement costs, even if the APR
is slightly higher. Whatever you decide, you'll need to do
your sums before you sign on the dotted line.
Personal loans are repayable on a monthly basis. If there
is a degree of flexibility then the lender may permit over-payments
and lump-sum payments, both of which allow you to clear the
debt over a shorter time period than first agreed. If your
loan is a truly flexible product then you may also be able
to withdraw funds from the account on a rolling basis, providing
you stay within your credit limit. Lenders also offer repayment
holidays or payment breaks, allowing you to take a break from
your monthly repayments either at the start of the loan (known
as 'deferred repayment') or at an agreed point during the
term. Interest will continue to accrue on the outstanding
balance and this may result in increased monthly payments
so your debt is still repaid over the term agreed at the outset.
Getting accepted for a personal loan can sometimes prove
difficult if you've got bad credit, have changed addresses
frequently, have no previous credit history or are self-employed.
There are lenders who can help those who need 'bad credit'
loans and those who have difficult personal circumstances.
The APR is likely to be higher than that offered by a standard
personal loan provider, but the chances of getting accepted
are far greater.
If you're a homeowner with 'bad credit' or difficult personal
circumstances it may be worth considering a secured loan.
Click to compare secured loans.
Personal loans are governed by the Consumer Credit Act 1974.
The Act contains strict regulations about how money is lent
and covers unsecured loans up to £25,000 (these are
known as 'regulated loans'). When taking out a personal loan
you will be asked to sign a credit agreement, and you'll be
bound by it's terms. As extra protection for both yourself
and the lender, insurance policies (known as payment protection
insurance) are available and these will cover your repayments
in the event of sickness, accident or unemployment. In the
event of your death your debt could even be repaid in full.
Although beneficial, these policies can be costly with both
the cover and cost varying between lenders. You should always
check what a policy includes and excludes, as this may affect
your decision to take it out. Stand-alone policies are available
and these may prove better value than the policy offered by
your personal loan company.
How do I apply?
to begin the process of applying for an
Unsecured Loan
This site provides you with the facility to apply
online for your personal loan. You'll notice that many
of the most competitive products in the market place today
are available to you through our online application process.
Providing the product has an apply icon you can submit your
application via this website. This will ultimately save you
time as it means you won't need to contact the personal loan
companies direct. We also hold details of loans designed specifically
for applicants with a poor credit history or those who have
difficult personal circumstances - whatever your circumstances
we can help you to find the right product.
When you apply through us you will either complete a short
application form via our secure server, be re-directed to
the lender's website to enable you to follow their own application
process or you will be asked to submit your details for a
member of our Sales Support Team to contact you. Once your
application has been submitted to us, either our Sales Support
Team or the personal loan company will send you an e-mail
or letter acknowledging your application. If you completed
our application form it will be passed to your chosen lender
in order that they may process it.
If you are experiencing serious
debt and credit card problems please visit www.debts-solved.co.uk,
our dedicated debt
solutions website, for further information on how you
can reduce your monthly payments without further credit.
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