Personal Loans - Unsecured

Unsecured Loans

What are Unsecured Loans?

Unsecured loans are advances made by a lender, (the bank or finance company) to the borrower (you). You receive a lump sum of an agreed amount at the start and you agree to repay the loan, usually over a fixed period, by making monthly payments.

What assets are they secured on?

Unsecured loans are different from secured loans as they are not secured on any assets you may hold. Unsecured loans can be available to people with little or no equity in their main property and no other property to offer as security.

What are unsecured loans used for?

Unsecured loans are usually taken out to fund the purchase of an expensive item, such as a car, a caravan, a boat or a holiday and they are also used to consolidate existing debt to make monthly payments more manageable.

Lending Criteria

As with secured loans, lenders have restrictions and requirements on who they will lend to and what the money may be used for, known as lending criteria. Lenders always have to ensure that people they lend to have earned income, to make sure they have the means to make the repayments on the loan. The income may either be from Employment or Self-Employment. Benefits and other receipts are not regarded as earned income, so would not be eligible for a loan. There may be some restrictions on what the loan is for. Some lenders have no restrictions, so their loans are known as “any purpose”, others may be restricted to home improvements, or debt consolidation, or car purchase, or a combination of them. Finding the correct loan for the individual requires constant research of what is available for the many lenders in the market, which is why you need our whole of market loan brokers to help you.

How much can you borrow?

There are no loan to value considerations with unsecured loans, as there is no security in the form of property or other assets. Various lenders have the own minimum and maximum amounts they are prepared to lend, but it is possible to find loans of any amount between £500 and £100,000. The main criterion is the borrower's ability to make the repayments, so it depends on income and other commitments.