A Guide to Unsecured Personal Loans - Tenant, Compare
A personal loan and an unsecured loan are actually
identical; lenders just like to use different terminology to describe the same product.
A personal loan is described as an unsecured personal loan as it allows you to borrow
money without having to use your home or even car as security.
What the lender will do to determine whether or not an unsecured loan is a viable
option is to perform a credit search. This way the lender can look at your personal
credit history and make their decision based on your credit rating.
Click here to see more on our FAQs page.
Choosing the right loan
Where personal loans are concerned, especially in today’s market, consumers have
a variety of different products to choose from. Loans can be very diverse, depending
on the amount and purpose of the loan; you will always be looking at different repayment
terms and interest rates. If for example, you are looking to borrow £10,000 or more,
the repayment term will usually be much longer, usually 5-7 years, than if you were
to borrow a £1,000.
The minimum loan amount available is usually a £1,000, however, there are many lenders
who will lend as little as £250 to a customer. The maximum unsecured loan amount
available in today’s market is £25,000; this will vary between lenders.
Irrespective of the lender and loan amount you choose, the amount borrowed will
always be the subject of an Annual Percentage Rate or APR. The APR determines the
amount of interest you will have to pay on top of the loan amount. The APR can differ
from lender to lender; even the way you apply can have a bearing on the APR offered;
if you apply via the telephone you may be quoted a higher APR than if you apply
online and vice versa. It is always advisable to shop around for the best deal to
see which lender is offering the most competitive rates of interest before making
the application itself.
Click here for a more detailed explanation of APR’s
If it’s a low cost loan that you are looking for, then comparing the APR is one
place to start. It is always worthwhile familiarising yourself with the different
ways lenders quote the interest rates on offer. For your benefit, we have listed
the different types of interest available below. From the list you should be able
to decide which method of interest would suit you.
Fixed Interest
A fixed interest rate will not fluctuate throughout the term of the loan, even if
there is a change in the banks base rate. Your monthly payments stay the same giving
you the opportunity to plan your budget and outgoings each month.
Variable Interest
A variable interest rate may fluctuate to reflect any changes in the banks base
rate. If there is a change you could see your repayments increase or even fall depending
on the variation in the base rate.
Typical Interest
A typical interest rate is what the majority of applicants who are successful for
credit receive. The rate offered to you is based on the loan amount, repayment term
and an evaluation of your financial status.
Set Interest
A set interest rate will be offered to every successful applicant for credit without
considering potential risk.
Things to consider when taking your loan
Before you complete your loan, there are always other factors to take into consideration.
Of course, a low APR is a major part when it comes to your final decision; however,
you should always take a good long look at the small print of any loan agreement
before you sign on the dotted line.
Some lenders may apply an early settlement charge or redemption penalty as it is
also known. This can apply if the debt is repaid in full before the end of the original
loan agreement date. The charges may vary from lender to lender but as an example,
you may have to pay up to 2 months worth of interest if you decide to settle the
debt early. If you feel that you may be in a position to pay the loan in full before
the end of the agreement, then you may want to consider a loan with no early settlement
charges/redemption penalties, even if the APR is slightly higher. The decision is
yours but make sure you do the math before finally taking the loan.
Unsecured personal loans are repayable on a month to month basis. If you are looking
to pay the debt off at a faster pace, then some lenders allow a level of flexibility
when it comes to the repayments. This may consist of an option to make over-payments
on the loan or even lump sum payments. This gives you the opportunity to clear the
debt in a shorter time span than was first agreed. What you may also be in a position
to do with a truly flexible loan is withdraw funds from the account on a rolling
basis. However, to do this, you must ensure that you stay within your agreed credit
limit. Some lenders offer repayment holidays or payment breaks, this can allow you
to pause your monthly loan repayments. If you take the repayment holiday/payment
break at the start of your loan, then this is known as a ‘deferred payment’, you
can however take a repayment holiday/payment break at any time during the loan period
as long as it has been agreed with the lender beforehand. If you do decide on a
repayment holiday/payment break, then the interest on the loans outstanding balance
will not stop but continue to accrue. This may result in your monthly payments increasing
as the debt will still need paying over the term that was agreed at the beginning
of the loan.
Sometimes getting accepted for an unsecured personal loan can prove to be quite
problematic. You may have what’s known as bad credit, changed your address often,
have no previous credit history or maybe you are self-employed. These are just some
examples as to why an individual may encounter trouble when it comes to being accepted
for their unsecured personal loan. There are lenders in the market place today who
offer what’s known as a ‘bad credit’ loan. This type of loan is mainly for people
who have complicated state of affairs when it comes to borrowing. What an individual
with bad credit has to consider when being offered this type of unsecured personal
loan is of course the APR. The APR is certain to be higher than that of a High Street
bank or any other typical unsecured personal loans provider due to the risk element
the lender is undertaking when providing the finance.
Any unsecured personal loan you take will be governed by the Consumer Credit Act
of 1974. There are strict regulations in place on how money is lent; the regulations
are not only there to protect you as a consumer but also there to protect lenders.
The Consumer Credit Act of 1974 covers unsecured personal loans up to £25,000; these
are identified as regulated loans.
Before you take out your unsecured personal loan you will be required to sign a
credit agreement which you are then obligated to. For added security for both yourself
and the lender you may want to use the insurance policies which are on offer. These
insurance policies are commonly known as ‘Payment Protection Insurance’ or ‘PPI’.
The payment protection insurance will generally cover your unsecured personal loan
repayments in the event of sickness, accident or unemployment. In the event of death
whilst you’re still obligated to the loan repayments, the debt could even be paid
in full. Payment protection insurance can offer peace of mind and be advantageous
in some cases but they can come at a premium. Prior to deciding on payment protection
insurance you may want to check the policy wording, always look to see what is included
as cover and what is excluded as something you assume will be covered as standard
may not be. Along with checking the policy wording, you should also be conscious
of the extra summation that payment protection insurance can add to the loan total.
You are not tied to taking out the payment protection insurance offered by the lender;
you may want to take out a separate stand-alone policy instead as this could work
out to be a lot cheaper for you.
How do I apply?
Here at JST, we want to make it as simple as possible for you to apply for your
unsecured personal loan. All you need to do is make use of our ‘Personal Loans Analyser’
to see which loan would be the best one for you.
When applying through our site, you will either complete our own short application
form or you will be redirected to the lender’s website to complete the application
with them direct. If you have bad credit then we advise that you complete our simple,
free and easy application form online. Whatever your circumstances, we at JST can
look to provide you with the correct unsecured personal loan option based on the
information you provide.
What happens next?
If you apply through JST, your application will be processed quickly and efficiently
once all information has been collated and passed through our automated underwriting
system. An in-principle decision is communicated to you usually within 15 minutes
via email. As the underwriting process is automated there is no need for phone calls
which adds speed to the application process! Your information is then rapidly sent securly
to the relevant lenders and you will receive a final decision usually within 48 hours.
As a licensed credit broker, we will not carry out any credit searches. However,
each lender who receives your application will need to carry out a credit search.
This is so the lender can get a better understanding of your financial status. In
particular, the lenders will be interested in any County Court Judgments (or CCJ’s
as they are commonly known), defaults or arrears, information on your current credit
commitments, searches made by other finance companies and information relating to
the electoral roll. If you are refused the unsecured personal loan or wish to enquire
about details relating to your own credit file, then you can apply to the credit
reference agencies for a copy of your record.
Credit Expert from Experian
Credit Expert from Experian You can now view your credit file online with Experian
for FREE! You can gain an insight into how a lender may see your financial status.
To get access to your free report click here.
Alternatively you can get your report via
post at:
Experian
PO BOX 7710
Nottingham
NG80 7WE
If you ever fall into difficulties and find yourself in financial hardship then
you should speak to your lender straight away, especially if you feel that won’t
be able to make your payments. The sooner you contact the lender the better as they
will be a lot more understanding to your circumstances. If you have been refused
credit or need advice with debt, you may want to view our
consolidation page here where there is a lot more information available
on this subject.
Please note, for this service JST Financial Solutions will not charge you
a fee, it’s entirely FREE! We make our money from the lender, NOT the applicant.
And because we are not tied to any one lender, we are free to source the very best
unsecured loan deal for you.
We are proud of our reputation for helping people who other loan companies would
decline. There's no need to be put off if you think you have a low credit score
or a bad credit history as we are dedicated to helping those who have been declined
elsewhere.
There’s a whole lot more information on our site and we suggest that you peruse
the content before settling on any one particular product. It is advisable that
you take the time to read our Terms and Conditions before you actually use any of the services
provided by this site.