Writen by Steve C Clark
Obtaining an unsecured loan was a problem till a few years ago. This placed the non homeowners and people who did not possess a property in a disadvantaged situation. The ground realities have changed today and it is easy to obtain an unsecured loan today. The rates may be slightly higher than that of the secured counterpart but it is worth paying slightly higher for it and getting out of an unfortunate situation or planning the finances with the bigger picture in the mind.
Unsecured personal loans are the loans which do not require a collateral. Unsecured personal loans are available to everybody and can be obtained with a limited flexibility for one of the several heads. You may avail an unsecured loan for amounts varying between £500 to £25,000. The period of repayment varies between 6 months and 10 years. The period and amount may depend on the purpose for which the loan is takes – such as loans for holidays should normally be paid back within 2 years.
Since these loans do not require a collateral, sometimes these get processed faster than the secured loans. There is less of verification that is required and the resulting documentation is also less. The drawback of these loans is that the interest rate is slightly higher – mostly above 10%. This is understandable from the lender's perspective since the money of the lender is at a higher risk here than in the secured loan.
The interest for these loans vary to large extremes, so borrowers need to be aware of it and should be willing to invest time to read the fine prints of all loan documents. The rates are quoted beforehand by the lenders and these rates are advertised around – they are known as the APR – annual percentage rate. APR acts as a rule of thumb guideline to compare different products and lenders.
These APR's might not be the rates at which you would be offered the loan. They are simply representative rates at which an average of 50% borrowers would get the money. The exact rate would normally depend upon the amount of risk that the lender perceives in you – which in turn depends on your employment status, your repayment capacity, your credit history among others. It would also vary based on the amount of loan and the term being requested.
All personal loans including the unsecured personal loans are to be repaid monthly. Based on the contract, the lender may allow you to overpay and try and finish the loan earlier than normal. However, the lender normally charge a penalty for earlier repayment which is mostly up to 2 months of interest. However it is worthwhile to check all the documents before starting with or agreeing on any terms. Payment breaks and repayment holidays are also provided by some lenders and if these are important to you, you may insist to have these in the contract.
Since the options are diverse here and the flexibility limits of different lenders an products are different, it is best to compare and think well before going for such a loan. The APR gives a basic idea, but it is far more important to dig in a few of the shortlisted agencies to find which one is the exact match for you.
Steve Clark can tell you how to look better, live better and breathe better by giving you tips to improve your finances.He writes on loans. His ideas can help you rejuvenate your money.To find Personal loan UK,secured loans,unsecured loans visit http://www.ezpersonalloansuk.co.uk |
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