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Personal of Unsecured Loans

What is an unsecured loan?

An unsecured loan, often called a personal loan, is a straightforward loan from a bank or other financial institution.  They lend you the money, anything up to £25,000, over a fixed period of time, usually at a fixed interest rate.

Who can get one?

Anyone can get an unsecured loan, as long as they conform  to the lender’s criteria.  This is usually information received as part of a credit check.  Every lender has a different set of criteria that they use to assess how good a ‘risk’ you are.  What this means is that they need to decide, based on your past history, how likely you are to keep up the payments on the loan.  This information will also help them decide what interest rate to charge you.

How much can I borrow and over how long?

You can usually borrow up to £15,000 although some lenders have higher limits.  Unsecured loans are usually taken over any amount of time up to 5 years.

What will the rate of interest be?

This will depend on a number of factors, such as the prevailing Bank of England base rate, market conditions, the credit history and circumstances of the applicant and the amount of money borrowed over what period.  Most unsecured loans have a fixed rate of interest, so you know exactly what you will be paying back each month.  

How much will it cost to pay back?

This will depend on the amount of the loan, the interest rate charged and the period of time over which the money is borrowed.  We have put together a simple table to give you an idea of how much you can expect to pay per month, assuming the interest rate was 9%.

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