Typical unsecured personal loans are used for a variety of purposes, be it a new car, holiday, wedding, but rather than secured against your home or in the case of a logbook loan were your car is the security for the loan in case you default an unsecured personal loan is just that it’s not secured against anything.
The choices for choosing a personal loan lender are as wide as the range of interest rates on offer, well this does depend somewhat on your credit history and income. The traditional way to take out a personal loan would be through your bank, providing you have kept your account in good order and regularly pay in a salary or weekly wages, don’t go over drawn all the time then things should be easy, however the rate is not always the most favourable in the marketplace, when it comes to longer term personal loans it certainly pays to shop around, also it’s worth considering a personal loan broker, these loan brokers act as a middle man, they save you some homework and can place you with a suitable loan that matches your needs and personal circumstances. The amount that can be borrowed unsecured can vary considerably, many factors influence this, first an easy one, and homeowners can usually borrow more than tenants on same incomes etc. Typically an unsecured tenant loan would range between £250 and £15000 and repaid between 12 to 60 months, homeowner unsecured loans usually start at a minimum of £500 and top out around £25000, with repayment periods extended often up to 120 months.
Bank, Finance Company or Broker?
There are initial pro’s and con’s for each and who you decide to take a personal loan from will depend on your circumstances, banks have a high street presence, a real person to meet with if things go wrong, people often feel more secure in the knowledge that they are well know and established personal loan lenders, often people take the apparent easy route to secure their personal loan, after all if you choose your own bank they already have most of your details, but they will still no doubt wish to credit check you, although some banks do offer a pre approved unsecured personal loan amount which is based on how you run your account and the funds paid in each week or month from your salary. Finance companies on the other hand, and there are many usually a separate trading division of the major banks often giving better rates for personal loans than their parent company, lower overheads such as no fixed high street branches means the savings can be passed on to you the customer. Loan brokers differ from the other two in that they are generally not tied to one particular lender and can offer personal loans from multiple lenders which often means access to lower interest charges, they are also well placed to source personal loans for people with not so squeaky clean credit history, because they are paid on a commission basis, if they cannot find you a loan then they don’t earn anything.