Do You Know About Unsecured Loans? What are its Benefits?
If you are going to buy any high value item like a car, or spending on a home improvement project, then you can apply for a unsecured loan or personal loan. This type of loan can also used for consolidating all your other debts.
In case of unsecured loan, your lender will never claim on any of your assets, if in case, you fail to repay the loan. You may visit Simple PersonalLoans here >> if you are interested to avail an unsecured loan for the best rates.
What benefits do the unsecured loans offer?
- Usually as compared to secured loans, unsecured loans are more widely available.
- Here the lender will not typically ask for any security like any asset, such as your property (home)
- Unsecured personal loans often allow flexibility with repayment terms, and loan amounts
- For unsecured loans, the interest rate will remain fixed, hence you will know exactly how much amount to pay every month for repayment instalments.
Things to consider
- In case your credit rating is poor, it will be difficult to get any approval from lender for such unsecured loans
- Lenders will prefer to offer lower funding, than they would in case of secured loans
- If you fail on timely payments, then your credit rating may be affected, and you will be charged for late payment.
Large and small loans
There are number of flexible loans, can be offered by various financial companies starting from any small unsecured loans which starts from £1,000 to a large unsecured loan that can go as high as £40,000.
It is possible to choose your loan terms as per your convenience. Based on how much your need for borrowing, you can get at terms range from 1 to 7 years.
Cost of unsecured loan
In case your loan is approved by either a bank or any other financial institution, usually you will pay back interest component on the amount that you have borrowed and also the sum itself.
All loans come with certain fixed APR and based on this figure your cost of loan will be decided over a period of time.
Every loan will indicate its APR in their quotation. This is in fact is interest rate that is offered to minimum 51% of customers.
Usually APR that you are offered can be different from representative APR because each application will be treated on individual basis and what rate is offered will depend on number of parameters including your financial circumstances and credit rating.
Things to consider prior to applying
Check whether unsecured loan option will be right for you. Following are the checklist to decide whether it is better option as compared to secured loan or credit card:
- Check your credit rating to explore whether your rating will favour or adversely affect against your application
- Conduct a little research to find an APR as well as term of loan which you will be happy with
- Try to calculate the total amount to be repaid including the interest
- Also calculate your monthly repayments for your loan and ensure that you can afford it
- Check if there are certain other extra cost you require to budget for, e.g. setup cost or any late/early repayment penalties