It is getting increasingly difficult for people to manage their finances and this is why the average UK household has a debt of over £15,000. Many people are now turning to personal loans to help them survive from day to day and there are many others reasons why people are taking out loans. Personal loans are usually taken out for home improvements or to cover bills. It can sometimes be more convenient to take out a personal loan to consolidate other debt or for a large purchase, such as a holiday or wedding. It is not always easy to ask friends and family for help with finances and many people are embarrassed to say they are suffering from financial problems. If you don’t have savings, a personal loan might be the only choice. With personal loans, there are options for both unsecured and secured, depending on your individual circumstances.
Unsecured personal loans are loans which are available to a wide range of people, as the requirements are less strict than with a secured loan. With unsecured personal loans, you have a great day of flexibility, as you can choose when to repay the loan, with fixed payments usually between 1 and 5 years. The lower the term of the loan, the lower the interest rate will usually be. Unsecured loans usually have higher interest rates, as they are available to people without the required assets to use against the loan. It is important to pay the loan back as quickly as possible on an unsecured personal loan, as otherwise, you could find yourself experiencing financial issues.
We can help you find unsecured personal loans to suit your needs and circumstances, without the need to apply to multiple lenders. As we are working with many lenders, we ensure the process is as simple as possible. In some cases, you might even get your unsecured personal loans within hours of completing your application.
Why should I choose an unsecured loan?
There are many reasons why you might want to opt for unsecured personal loans. If you have suffered financial hardship in the past and your credit rating is poor, unsecured loans can be a better choice, as you are more likely to be accepted for these. Unsecured loans tend to be a lot more straightforward than secured loans. You borrow money from the lender and arrange to pay it back in regular payments, until the balance is cleared. You don’t need to be a homeowner, as the payments are not secured against your home, but this means you often pay higher interest rates.
Unsecured loans, such as payday loans are designed to cover expenses until your pay day and you pay the loan back in instalments, until the balance is cleared. Payday loans are unsecured loans with higher interest rates, but they are convenient and ideal for people who need access to money quickly. These are some typical reasons why people choose unsecured personal loans.
- Home improvements – if you urgently need to make improvements to your home and don’t have the funds to cover it, unsecured personal loans, such as payday loans can be ideal for this purpose.
- Credit card consolidation – some applicants have numerous credit cards and want to consolidate these, rather than trying to keep on top of all the different payments. Credit card consolidation is one of the most common reasons for taking our unsecured personal loans.
- Daily expenses – most of us have experienced that sinking feeling when we realise we don’t really have enough money to keep us going until our next pay day. This is where unsecured personal loans can be useful. You can use your loan to cover daily expenses, including travel costs and groceries.
- Holidays – you may just need to get away from it all and you don’t have the money to cover the costs. Holidays are a valid reason for taking out an unsecured loan.
We always recommend that our customers take out an unsecured loan if they don’t have any relevant assets, or they are bad at managing money. The reason for this is that these loans can cost you your asset, if you don’t pay the loan back on time. For example, if you take out an unsecured loan against your mortgage, you could end up losing your home if you don’t keep up with payments. If you have assets and you are good at managing your finances, then a secured personal loan may be the best choice for you.
How do interest rates differ between secured and unsecured loans?
With secured loans, you are borrowing against an asset you own, such as your home or car. This means they are much less risky for the lender than unsecured loans. With unsecured loans, you don’t need any assets, so you can expect the interest rates to be higher. It is important that you understand your income and expenditure before you apply for your loan, as you must be able to repay your loan. If you don’t pay your unsecured personal loans back, you could end up in more financial problems.
It is always more favourable to take out a secured loan, as the interest rate is lower, however, this is not an option for many people and in some cases, unsecured personal loans are the only choice. It is important that you take the interest rate into account before applying for a loan.
If the interest rate on a loan of £5,000 is 11.72%, your monthly repayment will be £165.40. The total amount to be repaid would be £5,954, which is comprised of the £5,000 and £954 interest.
It is important to be aware of the interest rate and to work out the total cost of the loan, before you apply. You may just take the loan amount into consideration, but remember that there is also an interest rate to consider.
What's the difference between an unsecured loan and a secured loan?
A secured loan is sometimes known as a homeowner loan. The loan is usually linked to the property of the borrower, or in some cases, it may be tied to an asset. Secured loans have a lower acceptance rate, as borrowers must have an asset to link to the loan. The loan amount for a secure loan is above £5,000. The terms of the loan, including your monthly payment, duration of the loan and interest rate, are all determined by personal circumstances and free equity of the property, if it is tied to your home.
The benefits of secured loans are that you can take out larger loans than unsecured personal loans. There is also a good chance of being accepted for the secured loan, even if you have a poor credit history, as your home or other asset will give the lender reassurance. You may also have a longer period of time to pay back the secured loan, than you would with an unsecured personal loan. Secured loans are extremely risky though. If you don’t keep up your payments, you could end up losing your home. This is something which is not the case with unsecured personal loans.
Unsecured personal loans are loans which are available to everyone, even if you don’t own your home. You do not need other assets to apply for this loan. You can usually borrow from £1,000 to £25,000, but the less you borrow, the lower the interest rate. Unsecured loans might include payday loans, and it is important to be sure about the terms and conditions of the loan, before you apply.
The benefits of unsecured personal loans are that they are available to more people and they are usually quite flexible, with repayments from one to five years. You may even be entitled to a payment holiday. If you want to borrow over a short period of time and/or you need cash urgently, unsecured personal loans are usually the most favourable option. They are particularly beneficial if you have a bill you need to take care of quickly.
Do all direct lenders offer different types of unsecured loans?
There are a range of unsecured loans to choose from, depending on your circumstances, how much you wish to borrow and when you need the money. Payday loans are types of unsecured personal loans which are usually available on the same day and they are ideal if you have been rejected for other loans. They are also easier to get if you have a poor credit rating. Other potential unsecured personal loans are credit cards. The approval and interest rate will depend on your earnings and your credit rating. Some credit card companies will undertake strict credit checks before accepting applications. It is worth checking your credit rating so you know which companies to apply to, as your credit rating could be affected by a credit check. Student loans are other types of unsecured personal loans which are ideal if you are a student and need access to cash to cover daily expenses and study materials.
If you are looking for an unsecured loan, we will check with a range of lenders to find you the best option to suit your circumstances. We work with lenders with varying requirements, and we can find the best solution to suit your needs. In many cases, you can even receive the funds straight into your bank account within 24 hours, depending on the lender and you may not need to supply any documents to go with your application. We have worked with many borrowers who have been looking for unsecured loans, and we can provide you with a selection of lenders with different interest rates to suit your requirements.