Unsecured Loans

Unsecured Loans

Unsecured Loans for uk borrowers
Unsecured Loans

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UK Finances and Loans » Unsecured Loans

Unsecured Loans

Unsecured Loans are more suited to people who can't get a Secured Loans as they have no valuable property as a guarantee. They are harder to get since it is harder for the finance company to get their money back if you fail to pay your loan payments. You may find it difficult to get an unsecured loans if you have had any mortgage arrears, defaults on loans, CCJs or other financial problems in the past.

Financial institutions such as banks and building societies offer unsecured loans. Unsecured loans are called so because the borrower is not required to pledge his sizable valued asset as a collateral to obtain the loan. Thus the insecurity surrounding a secured loan, regarding the repossession of property, is made irrelevant in unsecured loans. Due to the involvement of risk of non-repayment, the lender usually charges interest rates which exceed those on secured loans. However, a borrower with a good credit history can expect a competitive interest rate. Since there are lesser administrative procedures involved, obtaining an unsecured loan is less time-consuming. Generally, it is difficult to procure unsecured loans for business purposes or buying a property abroad. Financial institutions can offer loan amounts ranging from £500 to £25,000 over a term of 6 years to a maximum term of 10 years. The cost of loan borrowed entails the loan amount and an Annual Percentage Rate (APR). Hence, before entering into a loan, it is best to research for APRs on different products and select the most competitive one. A lender might offer two types of interest options - variable rate, and fixed rate. A variable rate is subject to rise and fall depending on the existing base rate during the term.

A lender will consult credit reference agencies for accurate information on credit history of a loan applicant and based on the findings he will approve or disapprove a loan application. These agencies give a detailed analysis of the borrower's financial condition based on county court judgements, earlier loan defaults and existing credit agreements. The lender may also refer to the credit assessment for charging the rate of interest on the loan.

These loans are repayable monthly. However, a borrower might consider paying off the loan amount by making lump-sum payments and thus making complete repayment before the agreed term. The borrower should be aware whether the lender will welcome this arrangement and offer rebate or will decide to charge a penalty for repaying the loan early.

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UK Finances and Loans does not represent any particular loans or finance company. When requesting a loan from any of the online loans or finance companies listed you are dealing directly with the loans or finance company. We are not responsible for the transaction or any problems with applications or loans arranged through any of the online loans or finance companies listed on this site.

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