Unsecured Personal Loan Guide

An unsecured personal loan is a loan available from a bank, building society or other financial institution without security. They are usually covered by the terms of the Consumer Credit Act. 

A lump sum will be loaned in return for you agreeing to make regular repayments usually by direct debit. Personal loans are available from £500 up to £25K (security will usually be needed for loans of large amounts) and are repayable over a period of time, usually between 6 months and 10 years. 

Lenders charge interest, which can either be fixed or variable, on the amount borrowed. This interest charge is expressed as an APR (annual percentage rate). The APRs will vary dependent upon the amount of the loan and sometimes the term as well. Usually the rate is fixed on your loan repayments and will remain the same throughout the period of the loan. It may be variable, particularly in the case of longer term loans, and you must be advised of this possibility at the outset. 

Payment Protection Insurance
This is an insurance that will cover your monthly loan repayments in the case of unemployment, accident, sickness or death. There are sometimes different levels of insurance providing different cover so it is important to check the small print to ensure the cover provided is suitable for your needs.