|
Financial Services >
Personal Loans
> Advice
> Unsecured
Personal Loans
Unsecured personal loans are normally repayable on a monthly
basis but you can now pay some on weekly basics at a fixed rate
of interest. They are not linked to any security, such as your
property, hence the use of the term unsecured. The upshot of this is that the lender will have
little option but to sue you in the county courts to recover their
money in the event that you fail to repay the loan in full.
Personal loans are offered by lenders such as banks and building
societies and are available in a variety of formats, each of which
may differ in the possible size, term and purpose of the loan
you need.
The maximum loan value and length of time over which the loan
is repaid will not be the same for car loans for instance. The
repayment term available may depend on the purpose for which you
require the Credit, and may be restricted accordingly e.g. Loans
for holidays and travel may be restricted to a 12 or 24 month
term. The amount available usually ranges from £500 to £25,000
over a term of 6 months to 10 years. This will vary between lenders
and products that they offer. The amount borrowed is subject to
an interest charge, which will be quoted as a percentage. This
rate is known as the Annual
Percentage Rate (A.P.R).
As a general guide, it is advisable to compare the A.P.R's of
different products, as this will help you to determine how competitive
the different creditors are.
The way lenders quote interest rates varies. A fixed interest
rate will stay the same throughout the length of your loan, regardless
of any changes in the bank
base rate. If the rate offered is a variable rate, it may
rise or fall in line with any changes the Bank
of England makes to the base rate during the term of your
loan. When lenders quote their APRs
they will state whether these are "typical" or whether
they are set at one rate for all successful applicants, regardless
of the risk they present. The typical rate is a rate that is offered
to over 55% of successful applicants at the time, and the exact
rate offered to you will depend on your personal circumstances.
Personal loans
are normally repayable monthly. The lender may permit over-payments
and lump sum payments, which allow you to clear the loan over
a shorter term than that agreed at the from the start. It is VERY
important to remember that some lenders will charge you a penalty
for repaying your loan early this can be up to 2 month's interest
or more. Lenders may offer "payment breaks" or "repayment
holidays" as part of their personal loan package and these
allow you to take a break from your repayments at the beginning
of the loan or at any agreed point during the term you can some
times set this with the lender so you don’t pay in August
or December so you have more money for holiday times. Interest
may still accrue on the balance outstanding so the exact terms
should always be verified with the lender before you sign.
Unsecured
loans can be difficult to obtain, particularly for those with
an impaired credit history, who will be forced to pay a fairly
high rate of interest if any willing lender can be found be very
careful not to end up paying over the odds it may seem good at
the time but you will regret it later trust me.
All loan products are advertised with their Annual
Percentage Rate. The APR on a loan reflects the true cost
of a loan to the customer, taking into account the loan interest
rate and any additional charges. This makes it easier to compare
loans with different up-front charges and introductory discounts,
meaning you can make an informed choice when you decide which
one to go for.
HOW
DO I APPLY ?
BACK TO ADVICE >>
|
