What is an unsecured loan?
If you want a loan but you're not a homeowner – or if you simply don't want to secure a loan against your home – then an unsecured loan could be the ideal way to raise some additional cash.
No need to be homeowner
Unsecured loans are ideal for people who are in need of money, but don't own their home. Lenders will consider your application based on your credit history, income and outgoings.
If you're a tenant or living with family, an unsecured personal loan could be an ideal way to get the money you're looking for.
Why choose an unsecured loan?
Raise money for various purposes
An unsecured loan can be a convenient way of raising additional funds if you don't own your home. It could be used for things like home improvements or a holiday - anything you can't afford to pay for up front.
Consolidate your debts
If you have multiple debts and would like to simplify your finances, a debt consolidation loan could help.
By taking out a new loan to cover your existing debts, you will only have to make one monthly payment instead of many. You could even reduce the amount you pay each month, by spreading out your repayments over a longer period than the original debts. However, be aware that you may pay more interest this way than if you had chosen a shorter repayment period.
Have you considered a secured loan?
Of course, unsecured personal loans are not for everyone. If you're a homeowner, there are some advantages to secured loans that you may want to consider.
If a loan is secured, it means that the deal is secured against your home (your 'asset' in the loan). Lenders may consider this less of a risk, and as such secured loans sometimes have lower interest rates, as well as the option for a longer repayment period.
The overall cost for comparison is 16.9% APR (typical).