An unsecured loan is generally referred to as a
'Personal Loan'. Personal loans are normally quite
simple - you repay the amount you borrow plus a fixed
rate of interest over a fixed period of time.
Simple, if you can get one.
Will I get an Unsecured Loan?
If you have a good credit history and can prove the
ability to repay the loan, then you should be suitable.
If you have a bad credit history then it's likely the
only offers that you'll get will be from lenders touting
high interest loans. You should consider all other
options before committing yourself to anything
expensive.
How long a period should
you borrow over?
Your first priority when faced with this dilemma will
undoubtedly be to keep the repayments as low as possible
but you should also consider the bigger picture - how
much will it cost you overall? For example, if you
borrow £10,000 over 3 years at 7% interest, you will pay
back a total of £11,100 - do it over 10 years and you'll
pay back £13,800. It's a big difference.
What else to look out for
If you think that you might be able to repay the loan
early, ensure that the loan provides the flexibility to
do that without incurring charges.
Remember, every time that you make an application, it
will appear on your credit record and multiple
applications on a credit record rings alarm bells with
lenders.
Check whether the loan comes with or without Payment
Protection Insurance and decide whether you really need
it or not. It can be quite expensive when you
total it up over the period of the loan.
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