A simple explanation of Unsecured Loans
Unsecured loans are basically personal loans, which are not secured against the borrowers home. They are one of the most common loan products within the UK, and account for approximately 50% of all completed loan arrangements.
Unsecured loans are popular amongst consumers for the simple fact that there are next to no restrictions on how the loan can be used. In respect of secured loans, some mortgage companies may be required to give consent to the borrower, before they are able to proceed with the loan, whereas applicants of unsecured loans are not bound to the will of their mortgage provider (if they own their own home).
What purposes are unsecured loans used for?
Pretty much anything! From buying a new car, to going on holiday, for paying debts or making a special purchase, unsecured loans are about as versatile as a financial product can get. The only real restriction, from the perspective of a lending company, is that the loan is used for legal, legitimate reasons. Unsecured loan borrowers will be required to explain how they intend to use their loan, and lenders are fully within their rights to refuse the request for finance if they see fit (although in fairness this point applies to all loan types, not just unsecured).
Are unsecured loans cheap?
Unsecured loans can be cheap, but the cost is obviously relative to each individual that applies for one. Some lending companies will provide unsecured loans at rates, which almost compete with that of an exceptionally well-priced secured loan, but getting accepted for these types of plans can be intense (from a personal credit perspective) and are only available to proportionally small number of borrowers.
On average, unsecured loans are reasonably well priced, but do not usually compare to that of a typical secured loan. This, as you might expect, is due to the fact that unsecured loan lenders are putting themselves at far greater risk than they would if some form of collateral was provided as assurance. Assuming that you are aware of this fact, and are also realistic in your own expectations of your loan, then you are less likely to be disappointed with the rate and term that is offered to you.
How can I increase my chances of being accepted for an unsecured loan?
Probably the easiest way to increase your chances of acceptance is to know a little bit more about the unsecured loan market before you apply. The main points that you should be aware of are as follows: -
- Having bad credit is more of an issue with an unsecured loan, than it is for a secured. If you do have bad credit, it is probable that your offered rate will be outside of the boundaries of what most would describe as being competitive.
- Know that unsecured loan lenders do not offer lengthy repayment terms. Again, length of term is relative to each individual applicant, but on average unsecured loan terms are spread between 3-5 years.
- Understand that limited numbers of unsecured loan enquirers are able to borrow large amounts. The average advance for an unsecured loan in the UK is approximately £4000.
Getting the best unsecured loan deal through cheaploans.co.uk
With the exception of some banks and building societies, cheap loans
have access to close of the entire of the unsecured loan market in the UK. Our unsecured loans are arranged through a number of lenders that you will have heard of, and also through some that you wont have come across before.
Having access to such a wide and varied panel of finance providers helps us place more applications for unsecured loans than almost all other online only finance firms, and has also helped us to achieve an acceptance rate, which we believe is second to none. We also do not charge any kind of fees to our unsecured loan customers (or any of our other customers for that matter).
Latest Unsecured Loans News
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