Getting an unsecured loan (part 1 of 2)

Personal unsecured loans are repayable on a monthly basis at a fixed amount. This allows you to pay all your existing creditors now. When this is done you then only pay off your loan. Unsecured loans are not linked to any underlying security, such as your home, hence the use of the term unsecured. Unsecured loans are normally offered by banks and building societies and are available with a variety of packages. Also some unsecured loans offer the option of over-payments or under-payments that could help you depending on your current personal circumstances.

Disadvantages of unsecured loans

The interest rate you pay on unsecured loans is likely to be higher than that of a secured loan.
Also, if you can’t afford the repayments on unsecured loans, you can be hit with heavy fines or maybe even bankrupted. If you have an impaired credit history, unsecured loans may be difficult to obtain and you will be forced to pay a fairly high rate of interest.

Periods in which you can pay unsecured loans over

This varies from company to company. Payment periods on unsecured loans tend to be calculated on the amount borrowed. Make sure you only borrow what you can afford to pay back. It’s very temping to choose the longest period in which you can repay any unsecured loans, as monthly payments are lower. However, you should remember the longer the unsecured loans are taken for, the more interest you will have to pay. On the other hand it is not a good idea to go for the shortest period possible, as you need to be comfortable with your repayments. If you are late in repaying unsecured loans then you will probably be charged. Be careful to budget for emergencies.

For your information- Unsecured loans advisers and agents

When looking for unsecured loans, it is always advisable to take time to shop around. The difference in rates with different unsecured loan companies can be huge.