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Unsecured loans are not "secured" on the value of your house and so there is more risk on behalf of the lender. The unsecured loan lender will not be able to offer you as much with an unsecured loan as with a secured loan. However if you are NOT a homeowner you will only be able to apply for an unsecured loan.
Because you not securing the money you are borrowing, lenders tend to limit the value of unsecured loans, however you may find that some loan providers may offer you more, perhaps if you already bank with them or have taken out a loan with them before and have always paid money back on time.
You will probably find that lenders charge a higher rate of interest on unsecured loans than they would do if you were taking out a secured loan (where the loan is secured against your home). This is because they have no guarantee that you can repay the loan, and therefore charge you more in interest to cover the cost of insurance policies that they need to take out to protect them should you default on repayments.
The amount you borrow usually starts at £500. If you require less than this, it might be worth talking to your bank manager about a taking out a small loan or perhaps simply increasing your overdraft. The repayment term (the length of time over which you repay the loan) can be anything from six months to ten years, and the duration that is applied to your loan is really your decision but smaller-sized loans may not be available for a term in excess of five years. If you are going to repay the loan over a long period of time, bear in mind that the longer you take to repay it, the more you will pay back in interest.
The best way to work out how much you are going to be paying is to look at the interest rate that the company advertises. Lenders are obliged by law to tell you how much they charge for this type of finance and this is worked out as an annual percentage rate (APR).
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