What are un-secured loans and personal loans?

A personal loan and an unsecured loan are the same thing, but providers use different names to describe the same product.

A personal loan is sometimes described as an unsecured loan because it allows you to borrow money without having to provide security against it, such as your home or car.

Instead, an unsecured (or personal) loan provider will base their decision on granting you a personal loan by using your personal credit history. This is verified by a credit check to determine your credit rating.

How much can I borrow and over what term?

As unsecured loans can pose a higher risk to lenders, they often expect these loans to be repaid over shorter periods i.e 60 months. The maximum borrowing is usually capped at £25,000.

How do I get charged?

Lenders charge interest on the amount you borrow, which is referred to as the Annual Percentage Rate (A.P.R). The amount you can borrow, the term available and the A.P.R will all depend upon your status including the lender's view of your ability to repay the loan and your personal circumstances, for example any adverse credit. The A.P.Rs quoted by the lender will usually be typical rates, and these act as a guide only as the exact rate offered will be on an individual basis. As a general rule, it is advisable to compare the A.P.Rs of different loans, as this is a good way to determine how competitive they are.

The Financial Services Authority does not regulate secured loans.

Related Links

- Mortgage Types
- Debt Consolidation
- Debt Management
- IVA