Personal Unsecured Loans Advice
Until you can afford your own home, you will borrow using a product known as an ‘unsecured loan’.
This is a personal and unsecured loans advice guide to help you avoid the pitfalls. Some personal loans can be costly so it makes sense to do some research and track down the best deal you can.
Loans With No Equity
An unsecured loan is one whereby the borrower does not have to put up anything (such as a house) to guarantee that the loan will be repaid. In fact, the only guarantee the lender has from the borrower is their ability to repay. The lender will usually make their decision based on a borrower's previous credit history (their credit score) which will tell them if they've borrowed money previously and if they kept to the repayment agreement. The borrower's income and job stability will also determine how much the lender will be prepared to lend.
We recommend that you always seek professional personal unsecured loans advice (or a company offering debt consolidation loans with bad credit) if you have a problem with your credit record.
More Popular
These types of loan are far more popular with younger people who may not own a house or have a mortgage and therefore only have their 'word' - and their credit history - as a guarantee that they will be able to repay the money. The amount you can borrow usually has a lower limit than other forms of borrowing and normally has to be paid back more quickly - usually within 5 years. However, they are popular for funding purchases such as cars or holidays. As the risk of the unsecured borrowing increases to the lender, so do the interest rates, which can be higher than for some other forms of borrowing.
Also the likelihood that your application may be turned down is also increased. In those circumstances yo may need to re-evaluate your borrowing options or perhaps ask for a smaller loan. Once you have built up a track record of reliable borrowing and repaying, you are more likely to be offered other forms of credit.
Typical APR
It's important to look past the 'typical APR' quoted in the adverts. Whilst this is a good indication as to which loans are the cheapest, it is worth pointing out that whilst a typical APR might be 7.9%, it doesn't necessarily mean that's the amount of interest you would have to pay back on top of the sum you borrow. A 'typical' customer usually covers around two-thirds of all customers so you may be one of the 'one in three' who would be only be offered a higher interest rate. It is all based on your own individual credit rating. However, it could well be that you get offered an even lower interest rate than the typical rate offered, if your credit rating is extremely good. If you are interested in bill consolidation, ie grouping together a series of existing debts into one more affordable monthly repayment, then the typical APR becomes important if you are to save any money by going through this process.
Simplifying your finances is commonly offered as the reason for consolidating debts, but you should be aware of the longer term consequences of extending the repayment period of any debts.
To apply for a personal unsecured loan with free advice, you just need tocomplete our enquiry form and we'll start working on your case.