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How to Use an Unsecured Loan
These loans are the jack of all trades and are an ideal starting point if you are considering a loan for pretty much anything - so long as it's legal!
The good news is that you don't have to own a property to be accepted for an unsecured loan, but if you do, they will look favourably on diligent mortgage repayments.
So long as your credit history is kosher you could borrow anything from a few thousand, to tens of thousands, providing you can make the repayments.
Making the most of your loan:
Repayment period
Many people focus all their attention into the amount of money they need and the rate of interest they are getting it at, neglecting to think about the amount of time they need to pay it all back.
It is essential that you choose a period of repayment that allows you to pay back the loan slowly enough so that you can continue to live within your means, yet as quickly as you can to keep down the overall interest you are paying.
Our unsecured loan calculator can help you to work out how much you can afford to borrow and pay back, and the timescale you need to do so.
Deferred repayments, payment breaks & payment holidays
Despite sounding like a package holiday deal, these phrases are actually part of loan terminology.
Deferring your payment allows you to delay the start date of your loan repayments for an agreed timescale (usually a few months).
Payment breaks and holidays are designated gaps within your loan repayment plan that you can forgo repayment. This can be handy to get you through difficult periods like Christmas.
Be careful . . . you will still be charged interest over these periods despite the fact that you are not reducing your loan amount!
Things to watch out for:
The cost of redemption
If you are likely to pay off your loan sooner than the agreed timeframe – perhaps you are due to receive a lump sum of money a couple of years down the line - it may be worth your while choosing a lender that doesn't charge an early redemption fee.
Some lenders will charge you (1-2 months interest) for simply paying off your loan early. Check out our unsecured loan comparison page, which states the companies that don't impose these penalties and those that do.
Compare unsecured loans
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