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Unsecured Loans Comparison Guide

Virtually every high-street bank and building society today offers their own range of unsecured loans. This means that as a loan seeker you have plenty of options to choose from. Compare the products on offer using the following list of factors and don’t just agree to the one offered by your current account bank.

1. The APR on the Unsecured Loan
The typical APR of an unsecured loan can range from around 8% up to 18%. The rate you’re offered will depend to a large extent on your financial status, your credit rating and the amount you want to borrow. A good credit score often warrants a lower interest rate so shop around and see what’s on offer. If you have a fair or poor credit score you may still be approved for an unsecured loan however the interest rates in these cases can be over 40%. Watch out for these and if you can, borrow the money you need from elsewhere.

One other thing to compare with regards to APRs is the tier system that most lenders use. These lenders will normally offer one interest rate if you borrow an amount below £5,000, a lower rate for amounts between £5,000 and £10,000 and an even lower rate if you borrow an amount above these figures. This means that borrowing a few pounds more can save you hundreds of pounds in interest payments over the term of the loan.

2. The Length of the Credit Agreement
The shorter the terms of the loan agreement the more you will need to pay each month. Most unsecured loans only run for a maximum of five years however some lenders do offer seven and even ten year loan repayment periods. Find one that suits you and that has monthly repayments you can easily afford.

3. The Additional Fees
It is important to compare the additional fees that come with each loan as these can easily adds several hundred pounds to the overall amount you borrow. Set-up fees are charged by some lenders but not others so read the small print before choosing. You should also compare the early-repayment fees, just in case you find a way to pay the full amount off before the credit agreement officially finishes.

4. The Speed of Delivery
This may not be important to some people but if you require an unsecured loan in an emergency you’ll want the money in the bank within 24 hours. A lot of lenders now accept online applications and you can literally be approved within 10 minutes and have the money within hours. If this is something you require then check to see if the lender has online application facilities and whether you have to be an existing customer to use the service.

Unsecured loans aren’t difficult to apply for but they are difficult to be approved for. Find out what kind of shape your credit rating is in and decide how much you need to borrow before making applications. Then you can compare the available products and narrow down the field to the lenders that may approve your application. Too many applications in a short space of time can damage your credit rating so pick the best and stick to them.