Unsecured personal loans are extremely popular in the UK market. These loans can be used by both the homeowner as well as the tenant. Homeowners can avail these loans when they feel that furnishing collateral is too much of a risk. Also, tenants can avail these loans because they have no other option.
Unsecured loans come with a plethora of benefits. One of its major benefits is that this loan can be availed without the need for the borrower to put up any collateral as security against the loan amount. Also, the processing time for the loan is lesser, as there is no need for any property valuation as is the case with secured loans.
However, typically, the interest rates with unsecured loans are higher. Lenders do this as a way of keeping a margin against a potential default from the borrowers' side. However, if the borrower defaults on the repayment terms then there is always the option of the Charging Order for the lenders. Through this option, the lender can go to the court and if he is to win to case, then the borrower is forced to put up collateral against the loan amount. This collateral can be sold to recover the outstanding amount.
There are many avenues from where a borrower can procure an unsecured loan: building societies, traditional banks, private lenders and the Internet. The last two remain the best option in terms of expediency and convenience.
However, one has to look past the striking adverts that are being put up for loans. These loans advertise the best rates but they often come with hidden and extra charges. Proper comparison analysis and research of the loan market often brings about the best deals. So, do your shopping first before availing and unsecured loan.
