Unsecured Loans
Unsecured loans are generally seen as the safer alternative to secured loans. You may have heard them referred to as personal loans in the past, but they’re the same deal under the surface.
To compare the latest unsecured loans please visit our
loan comparison section
The idea of an unsecured loan is that you can borrow money without the risk of your personal assets being up for repossession should it all go wrong. You’ve probably heard the endless TV adverts about failure to keep up with repayments leading to the arrival of the bailiffs, but in the case of the unsecured loan, this isn’t so.
You’ll find that these kind of loans are used on more of a short term basis than their secured counterparts. They’re also much more popular. Not many people like to plunge in to business with the risks of a secured loan hanging over their venture.
You can’t borrow huge sums of cash, but the idea is that an unsecured loan shouldn’t be hanging around your ankles for a lengthy period. Most come with short terms of 3 to 4 years, or slightly less. It depends on the provider in terms of how you’re expected to make the repayments.
It’s pleasing to see that unsecured loans have become much more accessible thanks to the drop in interest rates. They used to be out-gunned by secured loans in those stakes, but recent years have seen a dramatic shift.
You can now sign up for a personal loan where the rates are comparable to the sort of interest you’d expect to pay on a regular mortgage. That’s a great deal for a short term loan.
Be sure to check all of the interest details that you can find before signing up to an unsecured loan. Don’t focus solely on the APR. It’s just as important to know the TAR - or Total Amount Repayable. By knowing this, you can budget clearly and work out how much you’re going to need to repay the loan in full.
Finally, it’s important to be aware of a relatively obscure strategy that loan sharks use to reclaim money via the courts. If you are the sole owner of property, or individual assets, creditors can go through the county courts with a charging order.
If they managed to enforce a judgment, your unsecured loan will be scrapped and replaced with the standard terms of a secured loan.
This spells trouble right away. You’ll be given payment orders by the district judge and forced to pay either through instalments or one chunk sum. The latter is obviously the most common repayment method. If you can’t repay the loan, you’ll find yourself in danger of house repossession and the forced sale of your assets. Not a nice proposition, eh? Not at all.
It’s true that unsecured loans are the safer option on the market, but don’t take that as a hint to spend freely and leave yourself in financial peril. It might not say that they can take your belongings, but rest assured, there are methods by which this is possible.
To compare the latest unsecured loans please visit our
loan comparison section
