Unsecured Loans

Sometimes a payday loan just isn’t going to cover the amount you require or need and if this is the case you are going to want a larger unsecured loan from your bank or other financial institute.

As the name suggests, unsecured loans are not secured against any property, car or other collateral. The criteria for qualifying for these loans has been tightened recently after the fiasco with the UK Banks losing heavily on people defaulting on these loans.

Interest Rate

The interest rate for these loans is slightly higher than a secured loan due obviously to the additional risk involved. The rate you pay depends on various factors.

Borrowing more can reduce the APR that is charged. Most lenders offer more attractive rates when you borrow in excess of £7500.

The duration of the loan also plays a part in determining the amount that you will be charged.

Credit Check

You will almost certainly have to pass a Credit Check before you are approved unless you are applying for one of the unsecured guarantor loans.

If you have a spotless Credit History you can get lenders to offer you very favourable terms and the process of getting the loan can be done very quickly. It is not, however, essential to have a perfect credit rating before you qualify for these loans.

Lenders who decline your application usually have subsidiaries and they will either pass your details to them or suggest that you contact them yourself.

Purpose of the Loan

There is no hard and fast rule on this one as the loan can be used for a variety of things. Buying a car is a very popular reason for example. The initial expense of buying a car usually means that a loan is required. You may not always be able to borrow 100% of the purchase price so it will mean that you have to put up some money yourself.

You may want to redecorate your home. Go on the holiday of a lifetime or any number of reasons where the amount involved is not readily available to you.

Buying property is not a viable reason as the lender would want to secure this on the loan.

Lenders Criteria

Again this will vary from lender to lender but the overriding factor is “can you afford the payments.”

Lenders are much more careful now and will look at several factors before deciding to lend.

As previously stated, your credit score is taken into account. The amount of income that you have coming in regularly and also if you have been employed for 5 years you will be considered to be a better risk than someone who has only been employed for a few months.

Your outgoings will obviously be looked at as lenders don’t like to see you having to expend more than a certain percentage of your income. This will vary again depending on the Lender.

You no longer have to visit a Bank personally to obtain an unsecured loan as all major lenders have an online facility that makes it easier to apply. You just visit the website and fill out the form and you can be approved very quickly.