A Brief Guide to Unsecured Personal Loans

By: Nick Cox

An unsecured personal loan is so called because they are not secured against any of the borrower's assets. Personal loans can be used for numerous purposes, although some lenders stipulate that they cannot be used for certain ventures, such as timeshares or business purposes etc. A popular use for an unsecured loan is to consolidate existing debts.

What are the loan options?
Loan amounts do vary; however, the minimum loan amount is typically ?1000, although you may find some lenders offering a minimum amount of ?500. The maximum personal loan amount available is ?25,000. If you require a larger sum then you may have to look at the secured loans option. To qualify for secured loans, you need to be a property owner. The loan is then secured against your property. Using your property as collateral is often a risky endeavour, so seek professional advice before you commit to a secured loan.

Compare APR Rates
Lenders use favourable APR rates to pull in new customers. Many lenders also offer different rates depending on the method you use to apply for the loan. For example, borrowers who apply using the internet may receive a lower APR than telephone applications.

Interest rates can be quoted by lenders in different ways, they include:

&bull Fixed Interest - a fixed interest rate means the interest rate on your loan will not change throughout its duration. Monthly repayments will therefore remain the same.

&bull Variable Interest - the interest rate may fluctuate in line with changes in the bank base rate. This could result in your monthly repayments changing during the loan duration.

Personal Loans
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