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Unsecured Loans

An unsecured loan is a loan that doesn’t have anything put up as security by the borrower such as a home which can be taken to cover the cost if a borrower defaults.  Because there is no security it means that the lender is taking a greater risk and that in turn means that the interest rate of the loan will be relatively high. Read more...>

	Barclays Borrow over 12 to 60 months, typical APR 9.9%	9.90%	£1000
	HBOS No penalties for early repayment	8.60%	£1000
	Halifax No repayments for 3 months	8.60%	£1000
	Bank of Scotland Fast Online Decision + No repayments for 3 months	8.60%	£1000

Even though the lender has no physical security they will of course have in place procedures for recovery of their debt.  Although there is no asset to lose directly there will still be serious financial consequences to failing to pay off the debt. 

In an unsecured fixed personal loan the amount, interest rate and time period of the loan are all fixed at the start of the agreement.  In this way repayment budgeting is made clear and can be planned for. 

If you are considering paying back the loan at an earlier date if possible to reduce your interest costs you should check whether there are any early repayment penalties before you take the loan. 

In an unsecured flexible personal loan you can take out a variable amount up to a set limit and only pay interest on what you have borrowed.  Again, that increased flexibility may well be off-set by a further increased interest rate.

As with all loans calculating a realistic amount that you can afford to pay back each and every month is an important consideration and from that you can begin to choose which loan is best for you.