Unsecured Loans
Unsecured loans are a means of borrowing money without the
associated risk of your personal assets being repossessed if you are unable to
keep up the repayments. They are typically offered to people on a short term
basis and are popularly used to finance home improvement, holidays or car
purchases.
The idea of an unsecured loan is to borrow money and repay it
over a short period of time. You won’t be able to borrow a large amount of
money and the maximum amount lenders are allowed to provide is £25,000. The
benefit to you is that the debt won’t be hanging around for that long and
usually you can expect a repayment period of around 3 to 5 years.
The unsecured loan market has grown considerably over the last
ten years, mainly due to low interest rates, and many people now choose these
over the more risky secured homeowner loans.
In most cases you can expect to get an Annual Percentage Rate close that is not
dissimilar to the interest you might pay on a mortgage, making
unsecured loans very favourable if you are looking to borrow money on a short
term basis. YourHomeBills.com recommends that you check all of the small print on the loans you compare and
be sure that you are fully aware of the Total Amount Repayable (TAR) before you
commit to borrowing.
Use the YourHomeBills.com
loans calculator to help find the right loan for you and your
circumstances.
Where can I get a low rate unsecured loan?
It used to be the case that when you wanted a loan you would simply visit
your local high street bank and apply for the best rate on offer. But in recent
years the market has been turned on its head with a plethora of internet loan companies springing up
and offering some amazing deals to consumers.
Choosing the cheapest loan could save you hundreds
of pounds in interest charges so it’s worth comparing all the available
options. Most lenders tend to charge fixed interest rates, which will help you
to manage your budget by keeping your monthly repayments the same throughout
the term of your loan.
Remember to only borrow the amount of money you need and to not overstretch
your finances so that you are able to repay the loan in full and on time each
month.
Use the YourHomeBills.com
loans calculator to help find the right loan for you and your
circumstances.
What should I consider before taking out a loan?
- Always borrow what you can comfortably afford to
repay – do not borrow beyond your means
- Always read the small print and identify and
avoid any loan arrangement fees.
- Identify any early repayment fees (redemption
fees) which may be charged if you pay back your loan before the end of the
term. This can add considerable expense to your loan.
- Decide whether you are likely to require a loan
repayment holiday. These can be welcome but remember that they add
interest to your Total Amount Repayable.
What is APR?
Typical APR is the headline interest rate figure quoted by lenders in their
advertising for personal loans.
The APR calculation takes into account the basic interest rate, any initial
fees, when interest is charged (i.e. daily, weekly, monthly or annually) and
any other costs you have to pay. Lenders are legally required to calculate APR
the same way, enabling consumers to make like-for-like cost comparisons between
lenders and their products.
Though you might think this is the total figure you will be
charged throughout the term of the loan, this is in fact just a
guide as the rate may fluctuate in line with market conditions. Lenders will
usually calculate the typical APR of their personal loans by using risk based
pricing. This allows them to assess the individual circumstances and credit
history of those people making the loan application before they
decide the appropriate interest rate to offer that person. On this basis not
everyone will get the rate they had hoped for.
Use the YourHomeBills.com
loans calculator to help find the right loan for you and your
circumstances.
Early repayment fees
At some stage in the term of your loan you may find that your
financial situation allows for paying off the remaining balance. By repaying
your loan early you can vastly reduce the amount of money you spend on it, so
it's worth finding a lender who will not charge for paying back the loan early.
Loan Payment Protection Insurance
Whenever you take out a loan you can be certain that
the lender will try and sell you payment protection insurance. This form of
insurance is offered at the time of your loan application and will
ensure that your loan repayments continue to be paid in the event that you
become unemployed, or have an accident or illness which prevents you from
working.
Be sure to check if you are already covered by any other
policies you might have taken out and look at whether your savings might cover
you should you fall seriously ill or become unemployed.
Payment protection insurance is a serious
consideration and you must ensure you know everything up front. Read the small
print from each provider and remember that you don't have to take it from the
same company that you took the loan from. Instead look around as a growing
number of Insurers are beginning to sell standalone PPI policies, which are
typically cheaper than the policies offered by the lending company.
Use the YourHomeBills.com
loans calculator to help find the right loan for you and your
circumstances.
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