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As an unsecured loan is not attached to equity in your home (dissimilar to a secured loan where, if you do not meet monthly repayments, you could lose your home), it makes it a popular choice for people wanting a loan. Different from secured lending, unsecured loans do not require the loan company to secure the debt against your property or any other assets.
Nevertheless, due to the lack of financial security for the loan company, with some unsecured loans, a slightly higher APR could be charged than those for secured loans.
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Unsecured loan products tend to be suitable for people who are not in the market for big loans - usually an unsecured loan might extend to the £15,000 level, however, loan companies tend to have their own standards and limits as to the size of the loan.
The funds from these loans can be used in the same manner as secured loans (with some restrictions) and you can decide on the amount of time you need to repay the loan. Usually, lenders will give you the option of paying back the unsecured loan within 6 - 120 months, so it is important that you do your homework prior to commitment and see exactly how much you can afford to repay each month.
As the lending criterias are not the same when taking out an unsecured loan as opposed to a secured loan it could be harder to get an unsecured loan. However, often there are willing unsecured lenders who will do all they can to facilitate an unsecured loan.
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