A UK unsecured personal loan is where you have not pledged an asset, typically your home against the loan.
This means that they are considered less risky by the borrower because your home is not at risk. However, because of this lenders
will chase you up more quickly for late and missed payments in order to help protect their investment.
A good credit rating and good credit history are the most important factors in determining the success of your application for this type of loan because there are no assets covering the loan. As a result, the lender needs to see that you are responsible and are able to repay your debts.
You will always pay a higher rate of interest for this type of loan because it is more risky to the lender.
Unsecured loan applications are processed more quickly because there is no administration work involving securing assets. Some lenders will pay out in 48 hours which is basically the time it takes to post the documents to you and back again.
People with previous bad credit may be eligible for this type of loan.
UK secured loans are for homeowners only because the loan is secured against you home. As a result if you have repayment difficulties you run the risk of losing your
home so it is important that you budget carefully before taking out a loan of this type.
It is easier to get a secured loan because the lender can sell your home to recover the debt if you default. This means too that they will consider lending to people with poor credit histories (defaults, county court judgements (CCJ's), mortgage arrears, bankrupts and IVA repair) because they know that the debt will always be repaid.
The advantages of this type of loan are that because they are less risky to the lender, interest rates are lower than for unsecured loans. Secondly, the lenders may be more flexible in the event of late payment or payment difficulties.
Secured loans take longer to process due to the extra work involved in putting a charge over your home and because the law dictates that certain types of secured loan require a cooling off period.
Non status loans are for people who are unable to prove their income status. Being self-employed is a good example, unlike employed people who receive payslips, self employed people may find
it hard to prove their monthly income. We have many lenders who will accept self employed people on non status loan plans, in most cases these are at the same rates as employed people.
These are typically where you take out a single loan which is large enough to pay of all of your existing loans and credit cards, the idea being that you either pay your credit off quicker,
so paying less interest or, you end up with a lower monthly payment so that you can afford to live and have peace of mind knowing that your debts will be cleared by a date you choose. These are usually secured
loans so take advice before taking out one of these.