Unsecured Personal Loans
The most common of all loans
Unsecured personal loans are the most common type of loan, and they're ideal for tenants or people who don't want to use their home as security. Interest rates are slightly higher than secured loans, and the loan amount and repayment period tend to be smaller and shorter respectively.
People apply for unsecured personal loans for two reasons: because they don't own their own home, or because they do own their own home but don't want to use it as security for a loan. As a result, unsecured personal loans are more risky for the banks than secured loans, and interest rates are higher – although not significantly so.
With unsecured personal loans the best deals are for people with good credit ratings and who are borrowing more than £3,000; if you borrow less, the interest rates increase sharply. If you've got a bad credit rating then you might find that the mainstream lenders don't want your business and you'll have to look elsewhere; a number of firms specialise in higher risk loans but the interest rates are usually higher – sometimes significantly so – than the big-name lenders.
Don't overlook your own bank but don't assume it offers a good deal either: while your bank probably offers unsecured personal loans, some high street banks offer terrifyingly high rates of interest while others have much better deals. As with all finance products it pays to shop around.
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