August 15, 2006 5:34 AM
Why Unsecured Loan?
Why choose an unsecured loan? An unsecured loan can be used for almost anything - a relaxing holiday, a new car, a wedding, debt consolidation or home improvements. These are just some of the reasons why people choose an unsecured loan.
If you want to raise money for most purposes but do not want to offer your home as security then an unsecured loan could be the solution.
For an unsecured loan the amount and period you can borrow varies. Lenders offer loans even as small as ?00 and can go up to ?5,000. The repayment period can be anywhere between six months to ten years.
Unsecured loans are offered by banks, building societies and also by the larger supermarkets chains.
Whatever you need it for there are a few things to consider before applying for an unsecured loan.
With an unsecured loan, the lender has no claim on any particular asset. Unsecured lending is generally more risky than secured lending, which is reflected in the relative rates of interest.
An unsecured loan is actually a loan where the lender has no claim on a homeowner's property in case the person fails to repay. The lender is solely relying on the ability of the borrower to meet their loan borrowing repayments.
With an unsecured loan, you're not borrowing against the value of your house. You will usually be offered an interest rate based on your circumstances and the amount you want to borrow. This means that the 'typical' interest advertised might not be the rate you are offered - your rate will depend on your credit rating.
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