Unsecured loans are simply everyday loans that do not have any assets directly secured against them (like a home) which can be taken if the borrower defaults.
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Even though the lender has no physical security they will of course have in place procedures for recovery of their debt. Although there is no asset to lose directly, there will still be serious financial consequences for failing to pay off the debt.
With an unsecured fixed personal loan, the amount, interest rate and time period of the loan are all fixed at the start of the agreement. In this way repayment budgeting is made clear and can be planned for.
If you are considering paying back the loan at an earlier date, to reduce your interest costs, you should check whether there are any early repayment penalties before you take the loan.
As with all loans, calculating a realistic amount that you can afford to pay back each and every month is an important consideration and from that you can begin to choose which loan is best for you.
Top Tips for Unsecured Loans
Unsecured loans tend to be more expensive than other loan types, because the lender is taking a greater risk
Fixed personal loans allow you to accurately budget your repayment schedule