Unsecured loans
Unsecured loans are repaid each month with added interest, which is usually fixed. You're not required to offer any security to the lender, such as your home, so if you default on payments the provider will need to take you to court to recover the debt.
The amount available usually ranges from £500 to £25,000 over a term of 6 months to 10 years.
Unsecured loans are suitable for any purpose, be it a new car or a holiday, for example. However, the loan size and repayment term may vary depending on the purpose of the loan.
Compare UK Unsecured Loans
Secured loans
With a secured loan some of your property is held as security for the amount you have borrowed. Secured loans usually offer lower interest rates than unsecured ones, but need to be entered with great care. If you fail to repay the debt, you could lose your home.
Secured loans are usually easier to obtain than unsecured loans as the lender is protected against the borrower being unable to make their repayments in the future.
The amount borrowed is normally repaid monthly over a term agreed at the start, which will usually range between three years and twenty-five years. You may be charged a penalty if you repay your loan earlier than agreed, and you should check each lender's individual policy with regards to this as it may cost you in the long run.
Compare UK Secured Loans
APR (Annual Percentage Rate)
Your loan will have an APR, which is the Annual Percentage Rate. The APR will include not just the loan's interest rate, but also any additional set up charges. This is the single most important factor in comparing loans as it represents the true cost of a loan to you. Before entering into any loan agreement, please make sure you know and understand all the facts about the deal.
Different lenders quote their interest rates in different ways. If the rate is "fixed" this means it will stay the same throughout the loan term. A "variable" rate is likely to go up and down in accordance with the Bank of England's base rate.
It is also important to check whether the quoted rate is the "typical" rate or the rate given to all successful applicants. The typical rate is the rate the majority of successful loan applicants will pay. However, you may end up paying a higher rate depending on your particular circumstances.
UK loans advice
Never borrow more than you can afford to pay back each month. Work out your monthly budget. What's your monthly income? What are your monthly living costs? The difference is the amount you can afford to use on repaying your debts.
Never apply for more than one loan at a time. If you do have multiple debts, try to pay off the one with the highest interest rate first. Concentrate on paying one off at a time.
If you can afford to pay back a loan over a short period do so. You'll pay far less interest.
Always check the small print of any agreement for additional charges such as a penalty fee for early repayment of the loan.
Remember, if you fall ill or lose your job you'll still need to repay your loan, so consider taking out loan insurance to cover your payments.
UK loans problems
If you have problems repaying a loan always contact your lender AS SOON AS POSSIBLE. If you're up front about problems they're more likely to be sympathetic and helpful.
Please remember, if you default on payments for an unsecured loan you could end up being credit blacklisted, which could affect your application for a mortgage or credit card in the future.
Organisations offering free debt advice include:
- The Citizens' Advice Bureau: (www.citizensadvice.org.uk/index/getadvice)
- The National Debtline: 0808 808 4000 (www.nationaldebtline.co.uk)
- Consumer Credit Counselling Service: 0800 138 1111 (www.cccs.co.uk)
Back to top ↑
Please note: TheMoneyFactor.co.uk makes every effort to ensure that all our information and the results from our calculators are accurate and current. However, we cannot guarantee 100% accuracy and cannot be held liable for any errors.
Nothing within TheMoneyFactor.co.uk website is, or shall be deemed to constitute, financial or other advice or a recommendation to purchase any product or service. Any and all information provided within TheMoneyFactor.co.uk website is for general information purposes only.
TheMoneyFactor.co.uk advises that you always check with the finance service provider before signing any agreement or purchasing any product.
| 
