Unsecured Loans
No matter how hard we try, sometimes your money simply won’t stretch far enough. Especially in these hard economic times, emergency situations and unforeseen circumstances can pose real financial problems and this is causing increasing numbers of people to look towards personal loans to ease the constraints on their purse strings. There are two types of personal loans available to you: secured and unsecured loans. Secured loans offer far greater sums of money, up to £150,000 and can be paid over a period of up to 25 years. Unsecured loans however, can only offer a maximum of £50,000 to be paid within 10 years.
So what is an unsecured loan?
An unsecured loan is a loan in which the lender relies on your promise to pay it back, and no collateral is required. Lenders are there to offer you financial security, but, without any guarantee, you can expect to pay back a higher rate of interest than with secured loans. Outside of established businesses, examples of unsecured loans would be a personal loan from a family member or friend with an I.O.U. signature of agreement to repay the loan. Credit cards are also a common type of unsecured loan, with each purchase being signed for by you, which authorises payment and acts as an agreement to repay the money borrowed. The terms of repayment are established upon obtained the credit card, rather than a case-by-case loan.
Taking a risk with unsecured loans
As no collateral is required, the lender is taking a far bigger risk than with a secured loan, so interest rates tend to be higher. They are often more expensive and less flexible than secured loans but far more suitable if you want a short-term loan. Individual factors such as the loan amount, your financial income and your credit score will decide the rate of interest – a process commonly known as a credit check. It is important that you check your own credit report before applying for a loan. The best rates for unsecured loans are found through credit unions and if you already own an existing account with a credit union then obtaining an unsecured loan should prove to be no problem at all.
A more popular version of unsecured loans are guarantor loans – loans with which someone other than yourself takes liability of the debt and is therefore liable should you not be able to maintain loan repayments. These loans are increasingly popular due to their availability to those with poor credit ratings.
There are several Loanfinders in the UK who can help you without charging any upfront fee. One such is http://www.loanfinderuk.co.uk/ - they understand that due to your financial circumstances, any upfront charges would not be suitable and as such there is no reason to not seek their immediate advice. They are adept at dealing with borrowers such as yourself who may have a bad credit rating, CCJs, are unemployed or are currently on benefits.