An Unsecured Personal Loan

An unsecured personal loan is an accessible and affordable method of borrowing money. They offer a flexible way to borrow any amount between £1,000 and £25,000, and the loan period can range from one to five years.

The flexibility means that you can change the amount you borrow, the length of the loan and therefore the monthly repayments to suit your income. You can use an unsecured personal loan for anything you like: a new car, the dream holiday, a laptop computer.

There are a number of unsecured loan providers on the market, each with different lending criteria and each offering a different interest rate. The rate you get charged on your loan will depend on the amount you borrow, larger loans attracting a lower interest rate. Your personal circumstances will also be important. Those with poor credit history will not be eligible for the best rates offered by an unsecured loan provider as these loans are riskier for loan providers than a secured loan (against a house, for example). With a poor credit history and previous refusals for unsecured borrowing you may find that a secured loan is more suitable.

There are two types of unsecured loans. Fixed personal loans are most common. The loan amount and total interest payable is divided evenly over the term of the loan, enabling you to plan realistically how much you can afford to pay back each month. The interest rate is fixed for the term so your monthly repayments will remain the same.

The other type of unsecured loan is a flexible loan. Less common and with fewer unsecured loan providers offering them, they allow you to specify a maximum borrowing amount but you do not need to take all of the funds at once. You need only withdraw the amount that you wish to and then pay interest on that amount. These loans are popular with anyone involved in a long term, variable project such as building work. These type of loans also offer some repayment flexibility, often stipulating a minimum amount to be paid each month but accepting greater repayments without penalty.

Many unsecured loan providers offer optional payment protection insurance which is designed to meet the loan repayments for you if you are unable to do so due to sickness or unemployment. It comes at an additional cost but it can be worthwhile to provide you with peace of mind, especially when borrowing larger amounts.

If you compare monthly repayments, additional features and charges offered by different unsecured loan providers you should be able to find a loan to suit your lifestyle.

Moneyback Bank Personal Loan is offering a loan of any amount from £3,000 to 20,000. The APR is 6.3% for loans over £5,000 (6.8% for under £5,000). There is a moneyback scheme which ranges from £10 a year to £40 a year for the top loan amounts. A £5,000 loan paid back over three years would cost you £152.79 a month, or £5,500.45 in total. However, this moneyback offer is only available to loan applicants that agree to take insurance on the loan.

GE Money Everyday Loan is offering a 6.9% APR, fixed, for amounts from £3,000 to £25,000 for one to seven years. Typical monthly repayments on a £5,000 loan repaid over three years would be £154.15 and the total amount repaid over the period would be £5,549.65. You have to be at least 24 to apply for this loan.

Tom Smith
20th September 2007

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