Unsecured Loans

• Unsecured Loans from £750 - £50,000
• Bad credit unsecured loans from £250 - £25,000
• Tenant unsecured loans from £100 - £15,000
• Unsecured car loans from £1,000 - £20,000
• Debt consolidation loans from £500 - £50,000
• Typical Apr from 14.9% - 44.9%
• Adverse or bad credit history are still accepted
• Previous arrears, defaults or CCJs accepted

There are many occasions in life when we may need to borrow money: buying a house or a car, or paying for a wedding or even a holiday are all common reasons for borrowing, and the financial market, to the uninitiated, can be a complex and confusing place to be. This is why it is important to understand the difference between certain types of loans, and here we look at the world of unsecured loans.

In simple terms unsecured loans are those in which the lender makes an advance without collateral attached; in a standard mortgage or loan the amount forwarded is secured against the item it was used to buy, or against other assets owned by the borrower. This is a secured loan, and in the case of default on payment the lender may exercise the right to seize the goods against which the loan is secured. The unsecured loan does not feature this right as there is no property, car or goods to claim – all the lender has is trust and information regarding the individual's financial status.

For this reason unsecured loans are harder to come by than standard collateral loans, and are sometimes referred to as signature loans, as all the lender is party to is the signature of the borrower on the agreement papers.

Unsecured loans will only be available to those people with a very clean and provable credit record; this is a historical record of borrowing and repayment that is collated and kept by the financial services industry in order to assess the risk involved in lending. Should the borrower default on an unsecured loan it is guaranteed to have an adverse effect on their credit rating, as the lender will contact the companies that compile such information and inform them of the additional risk.

While banks and other lenders are willing to forward unsecured loans to those people who show the right attributes and past history they do come with certain provisos; whereas a secured loan may be fixed to a set interest rate or fluctuate with the change in the economy, the likelihood is that unsecured loans will come with a much higher standard interest rate attached, thanks to the additional risk incurred by the lender in forwarding funds without collateral attached.

This means that unsecured loans are generally considered only in instances where no other source of funding is available, and this presents a paradox as those who cannot get secured loans, thanks to adverse credit histories, are most likely to be those seeking an unsecured loan and, of course, least likely to be granted such.

The world of unsecured loans is open that needs to be investigated thoroughly as, like any financial commitment, taking on such a loan is something that should not be done lightly. An unsecured loan can be very useful as a short term bridge – say for a holiday payment – although it is worth knowing that such short term loans carry very high interest rates indeed.