Online Unsecured Loans FAQs
What are unsecured loans?
Unsecured loans refer to any type of loan that is not protected by a guarantor, or collateralized against a specific asset such as a property, in the case of failure to meet the terms for repayment.
How do I know an unsecured loan is right for me?
You might wish to apply for an unsecured loan for a number of reasons. For example, if you don't have savings to cover your purchase, not be able to access a sufficient amount of funds through your credit card or you might not own a home to be used as collateral, which would allow you to take out a secured loan.
How much can I borrow with an unsecured loan?
You may wish to borrow a small sum of a few hundred pounds or a larger sum of several thousands. Typically, the upper-limit for most lenders providing unsecured loans is £25,000. For larger amounts, you may need to look at secured loans.
Are non-homeowners eligible for an unsecured loan?
As mentioned, being a homeowner isn't necessary. However, it helps to have a decent credit history. This provides a lender with confidence that you can repay a loan and that you have demonstrated an ability to handle credit responsibly. Poor credit may lead to seek lenders who charge higher rates.
What will the lender need to know about me, to secure an unsecured loan?
You will be required to provide or demonstrate:
- some form of identity, so it's important you exist on the electoral register
- a document such as a utility bill, so they can make sure you're a genuine person
- proof of a steady source of income is also usually required
- a good credit rating
Is it easy to search online for unsecured loans?
It's markedly easier these days than it used to be to compare different loan types from various lenders online. Unsecured loan providers offer quotes that allow you to determine if you can afford the repayment terms. Lenders may offer a wide range of interest rates too, so you can search online to find the one you think you can most likely afford.
Are there any risks involved?
As you won't have taken the loan out against any specific asset as collateral, the lender won't seize your home in the event you cannot make the necessary repayments. The risk in unsecured loans is if you make fail to meet your repayment schedule.
You may also suffer from various charges for missed payments and your credit record would be damaged. In some cases, debt collectors may also be instructed to retrieve the money from you.
What might happen if I cannot repay my unsecured loan?
Failure to repay will have a significant negative impact on your credit rating, affecting the likelihood of you getting credit in the future. If your provider is forced to try to retrieve the debt through court you may be subject to a County Court Judgement. This will show up on your credit report.
How might lenders differ in what they can offer?
Lenders can offer different kinds of loans but the suitability of those will depend on your personal circumstances, the amount you wish to borrow and for how long.