What is an unsecured loan?
Unsecured Loans – When you get an unsecured loan, you borrow money from a bank or a lender and agree to make regular payments until you’ve paid the loan back in full.
An unsecured loan (also known as a personal loan) is a loan that you can take out without putting up one of your assets (things you own like your home or car) as a way to qualify for the loan. These are called secured loans. If you don’t make the payments with a secured loan (usually these are monthly), you could end up paying more in fees and additional charges. This could end up damaging your credit history.
If you’re looking to take out a loan, find out more about Monzo and loans here. All you need to do is answer three quick questions to see if you can get a loan with us. Then we’ll show you what you could borrow and how much it’ll cost you, all without affecting your credit score.
If you are eligible, we offer 3.7% APR representative on loans of £7,500 to £15,000, and 19.5% APR representative on loans up to £7,500.
Types of unsecured loans
There are lots of different types of unsecured loans, but some of the most common include:
- Personal loans
- Overdraft loans
- Credit card loans
- Payday loans
- Utility bill debt
- ‘Buy now, pay later’ loans (also known as catalogue debt)
How do you qualify for an unsecured loan?
The lender will approve unsecured loans after they’ve looked at and considered:
- Your ‘creditworthiness’ or credit history
- Your personal circumstances
- Your income
- Your ability to pay
‘Creditworthiness’ is how suitable the lender thinks you are to get a loan. It can be based on your credit score and credit history. If you’re looking for an unsecured loan, you usually need a good credit score.
If you have a less than perfect credit score, here’s how you can try get a loan with bad credit history.
What can I use an unsecured loan for?
You could use an unsecured loan when you need a lump sum for a large purchase like home improvements.
The cost of the loan is fixed, so your monthly repayments stay the same for the whole time you’re paying back your loan. You can also use an unsecured loan for home improvements or a car loan.
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