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Loans UK - Unsecured Loans FAQ

What is an unsecured loan?

An unsecured loan is an obligation of debt. It is not backed by the pledge of particular collateral, unlike a mortgage, wherein one’s house becomes the collateral against the loan. If you have bad credit, then you may not be eligible for an unsecured loan.

Unsecured loans are different from secured loans in that they provide less risk to the individual taking out the loan because their house is not being used as collateral on payments. While this may be true in theory, if someone with an unsecured loan defaults on their payments, there will likely be court proceedings against them – and their home.

So an unpaid unsecured loan could in fact result in the loss of one’s home. This is why you should be careful to keep up on payments in the event that you take out an unsecured loan. Loan companies tend to be very aggressive on those individuals who default on payments to make sure that their investments remain stable.

 

Are Good Credit Rating And Credit History Are More Important With Unsecured Loans ?

 Yes. In fact, a good credit rating is probably the main determining factor as to whether or not your application will be successful. This is because you are not providing your house as collateral. Thus, the loan company will want to have ample evidence that you are a responsible, law abiding citizen who is in a position to repay their loan. A credit check will then be conducted, wherein the loan company will check on your credit score and credit rating. The rating is based on a number of different variables, including employment history, existing debts, and how long you have taken to repay bill in the past. As unsecured loans are a lot more difficult to get, it is necessary to have a very good credit rating in order to be completely successful in one’s loan application.

Are Interest Rates Higher?

 

Yes. The interest rates on unsecured loans are a lot higher than the rates on secured loans. This is due to the increased risk that the loan company is taking.

 

Are Unsecured Loan Applications processed quicker ?

 No. In fact, the application will be processed a lot faster than it would for a secured loan.

Are you struggling to get a loan to make debt repayments more manageable?

Betterway specializes in helping individuals who have been turned down for loans elsewhere. We can help you get an unsecured loan. For a free quote, contact one of our advisors today.