Unsecured personal loans
Unsecured personal loans are repayable on a monthly basis
at a fixed rate of interest. They are not linked to any
underlying security, such as your home, hence the use of
the term unsecured. The upshot of this is that the lender
will have little option buy to sue you in the county courts
to recover their money in the event that you fail to repay
the loan.
Personal loans are offered by lending institutions such
as banks and building societies and are available in a variety
of formats, each of which may differ in the possible size,
term and purpose of the loan.
The maximum loan value and length of time over which the
debt is repaid will not be the same for car loans as for
payday loans, for instance.
The amount borrowed usually varies from £500 upwards and
is usually repayable over a period of between 6 months and
10 years. Lenders charge interest rates on the amount borrowed.
Their rates can either be fixed or variable. If the rate
is variable, the rate changes with market forces and could
change the amount you repay. Fixed rates offer more certainty
but can be at a higher rate. As a general guide, it is advisable
to compare the Annual Percentage Rate, (APR) of different
lenders.
Personal loans are repayable on a monthly basis at a fixed
amount. However, some lenders offer the option of over-payments
or under-payments that could assist you depending on your
current personal circumstances.
Unsecured loans can be difficult to obtain, particularly
for those with an impaired credit history, who will be forced
to pay a fairly high rate of interest if any willing lender
can be found.
All loan products are advertised with an APR, or Annual
Percentage Rate. The APR on a loan reflects the true cost
of a loan to you, taking into account the loan interest
rate and any additional charges. This makes it easier to
compare loans with different up-front charges and introductory
discounts, meaning you can make an informed choice when
you decide which one to take out.
