If you want a simple, quick and convenient solution to your immediate financial problems, unsecured loans sure come handy. The requirements are minimal and you can get the cash in as fast as a few hours after applying for the loan. But like any type of borrowing, there are also risks involved. And if you’re planning to avail an unsecured loan any time soon, this smart and quick guide should help you make the right financial move.
What are unsecured loans?
Unsecured loans are exactly what its name says. These are types of personal loans that do not require any security, collateral or asset. Which means that the loan is not only easy to avail but the processing is often fast and convenient. But more important, the risks on the borrowers’ part are little to none. With unsecured loans, you don’t have to worry about losing your property because of nonpayment. You just need to stick with the repayment plan to avoid hefty fees added to your debt total.
What are the different types of unsecured loans?
There are many types of unsecured loans available in the UK. These loans offer different loan amounts available for borrowing and varied repayment length terms. Among the most popular examples of unsecured loans in the UK include payday loans, same day loans, peer to peer lending, credit unions and of course, the infamous credit cards.
How much can you borrow with unsecured loans?
Depending on your lender and your income, you may borrow between £1,000 and £25,000 with unsecured loans. When used right, unsecured loans offer sufficient amounts to meet a variety of personal needs. Whether you’re only looking to borrow a small amount or you’re in a financial emergency that requires a large amount, the right unsecured loan can take care of financial needs in a pinch. If you’re hoping to snag an unsecured loan with the cheapest rates, you must have good credit first then you can borrow anywhere between £7,500 and £15,000.
Who can avail unsecured loans?
Anyone who lives in the UK who does not necessary have to be a homeowner can avail unsecured loans. You’ll also have to be of legal age with proof of sufficient income to be eligible for this type of loan. With no security needed, requirements borrowers need to meet are only the basics. Make sure you also have the required documents ready for a speedier processing of your personal loan. Among the documents lenders usually require include your proof of identification, recent billing address and recent pay slips.
How much do unsecured loans cost?
The cost of your unsecured loans depends on several factors including your lender’s rates, credit score and income. If you have a good credit score and a large income, chances are high that you’ll be able to get the cheapest available rate for your unsecured loan. Conversely, having a bad credit history means that you’ll have to deal with higher interest rates all in all. In any case, unsecured loans are often more expensive than secured loans because lenders deal with higher risks.
Should you avail an unsecured loan?
Ideally, consumers are discouraged from availing unsecured loans because of the cost. But then there are also instances when you’re stuck with a financial emergency and you have no other source of money to take care of said emergency. In this case, it might be helpful to consider getting an unsecured loan. If you do borrow money, just make sure that you only stick with borrowing what you can afford. Committing to pay your loan on time is another key factor to keep in mind before closing any deal.