Unsecured Loans

Unsecured loans, where the loan amount is not guaranteed by collateral, pose a higher risk to lenders because their money cannot be recovered if the borrower is unable to make repayments. As a result, interest rates tend to be higher than for secured loans, even for those with a good credit score. For an unsecured loan you can typically borrow between £500 and £15,000 or more, depending on the lender you choose and the strength of your financial situation. The higher interest rates for unsecured loans recommended them for relatively short-term borrowing, usually between one and five years.

When considering an application for an unsecured loan, the lender will look for a good credit history (the record of your past borrowings and repayments, including any missed payments) and evidence of sufficient earnings to meet the loan repayments. Although an unsecured loan is not secured against the applicant's property as with a secured loan, applicants should nevertheless consider that non-payment of the loan could result in court proceedings or bankruptcy which would also force the borrower to surrender their assets to repay their debts.