Unsecured loans are loans that are available from a wide range of lenders, from High Street banks and building societies to Internet only lenders. As the name suggest an unsecured loan is not secured against any asset, and is based only on trust and contract. An unsecured loan is available to both homeowners and non-homeowners, unlike secured loans, which are only available to those that own their own home. In order to get an unsecured loan you need to meet the lender’s eligibility requirements, and therefore you should make sure that you familiarise yourself with the criteria for each individual lender before you make your application.

An unsecured loan can be used for a wide range of purposes, and amongst the popular purposes for which these loans are often used are the purchase of a new or used car, paying for a holiday, paying off smaller debts such as credit cards, funding an educational course, paying for a dream wedding, purchasing items for the home, and more. In order to find the best personal loan for your needs you need to compare a range of loans from a number of lenders, as this will increase your chances of finding a competitive loan for your needs.

It is important to remember that the eligibility criteria is very specific for most unsecured loans, and you should avoid making applications for a loan unless you meet the requirements, otherwise you could find that your application is rejected, which can damage your credit. Many unsecured loans are available online, and this makes it easy to check the eligibility, compare different loans, and make your application once you have found a suitable loan.

The maximum amount that you can borrow by way of an unsecured loan is around £25,000, but the exact amount that you will be able to borrow will depend on your credit rating, your income, your employment and financial status, your outgoings, and various other factors. The repayment terms are generally significantly shorter than with a secured loan, with repayment periods of one to five years with most lenders, although there are some lenders that will offer up to ten years.

In order to be eligible for an unsecured loan you need to have good credit in most cases, as most unsecured lenders will not consider lending to someone with damaged credit. This is particularly true in the current financial climate, where the global credit crunch has resulted in far tighter lending conditions, making it more difficult for consumers to get loans. There are some lenders that offer unsecured loans to those with damaged credit, but the interest rates charged on these can be extremely high.

If you are unsure with regards to which unsecured loan is going to best suit your needs based on your needs and circumstances you may want to consider going through a loan broker. You will only have to complete one application form, and the broker will then use this information to source a range of suitable lenders in order to try and find you the best deal possible on an unsecured loans.

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