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An unsecured loan is widely seen as a great loan product that can be used for funding a variety of things. If it’s home improvements that are required, of trading in an old car for a new one or even going on a dream holiday then this type of loan product could be just what you need. As this loan is flexible in what it can be used for, lenders are willing to loan you amounts that can be used to pay for a range of topics. Unsecured loans are loans that are issued by a lender without you having to secure your assets against the loan, such as your home. Lenders can also term Unsecured Loans as “Personal Loans”.
As so many of us are now computer literate, using the internet has become increasingly popular. Therefore, using the internet to apply for loans has become increasingly popular. If you choose to apply for a loan using this method, the lender will perform a credit check on you using their individual credit scoring system. Whether you choose to apply via the internet, in a branch or via the telephone, all applications will be assessed in accordance with the relevant credit checking system. Applications made via the internet usually give you an instant decision on whether the application has been successful. If the application is approved, most lenders can transfer the money to you within a matter of days.
If the online process is not for you and you require further clarity on your loan options, it is worth checking with your existing lender. They will be able to set up a meeting with their financial advisor who will be able to explain the best loan options available to you. Approaching your existing lender as a potential loan provider could offer you a better deal on interest rates if you take the loan out with them. They may also be able to arrange the unsecured loan without charging a fee to you.
Unsecured Loans are offered with an interest rate that is termed as “APR” (Annual Percentage Rate); the APR is the lenders way of calculating the cost of lending the loan to you. A “Typical APR” will be quoted at the time of application, however, once the application has been processed and the loan has been agreed, you will then be notified of the actual “APR” that is going to be used to calculate the monthly repayments.
The APR will be fixed by the lender for the duration of the loan; therefore, your monthly repayments will not change from month to month. Depending on lender, most loans will be offered over a repayment period of one to five years, however, if a larger amount is being borrowed then the repayment period can be extended to ten years.
When you are approved for the relevant loan, you can opt to purchase a Personal Payment Protection plan. This works in much the same way as an insurance policy whereby for a monthly fee, you will be covered from repaying your monthly loan instalments should you lose your job involuntarily, be involved in an accident or suffer from an illness which would cause you not to be able to work for a period of time.
Unsecured loans are often a cheaper way of borrowing compared to secured loans, providing that you have a decent credit score. They can provide you with a higher borrowing amount and you can choose to repay this amount over 1 to 10 year period; this can alter depending on the individual lenders criteria.
You should always be aware that if you are borrowing large amounts of money over a longer repayment period, the overall interest to be repaid will be greater. If you have the opportunity to repay the loan earlier than the agreed period, penalties may be imposed by the lender.
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