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You may have heard of secured or unsecured loans, but how much do you really know about the difference between the two? We’ve outlined the key points about unsecured loans below!
A secured loan is a loan that is secured against an asset, such as a property. These loans are typically much larger, which is why they need to be secured against something with a high value. Unsecured loans are also called personal loans and often have higher interest rates. This is due to the fact that there is more risk in lending the money - there is no security for the lender like there is with a secured loan.
Unsecured credit includes bank loans, credit cards, short-term loans and even car loans. There are benefits with each of these options, as well as restrictions. Bank loans are generally less flexible than other loans, as banks won’t typically offer loan amounts under £1000, to be repaid over a year or more. You could end up paying more in interest if you borrow for longer than necessary, or for more than you need. You’ll also need good credit to take out a bank or building society loan.
If you are looking into credit card options, you can find more information on the Money Saving Expert website. Like a bank loan, you’ll need to have a good credit history to take out a low-interest credit card. If you have bad credit, the credit cards you may be eligible for will likely charge high-interest rates.
Short term unsecured loans are available to those with poor credit, though the representative APR can be slightly higher. There is more flexibility, however, as you can choose a smaller amount you need and the number of monthly repayments you need to repay it. You won’t end up paying far more in interest because of restrictions in loan duration. Unlike with some bank loans, short-term lenders won’t charge you for making early payments, so you can save money in interest charged if you can pay early. Paying loans back early or on time can also improve your credit rating.
My Financial Broker can help you find an unsecured loan of up to £2000. We’ll find the best lender from our panel of trusted direct lenders, to get you the best possible rate.
Whether you decide to take out a secured loan or an unsecured loan will depend on your personal circumstances. As mentioned above, unsecured loans tend to be more accessible than secured loans, but what are the other key differences, and are there advantages to taking out one over the other?
If you’re thinking about applying for a secured loan, it may be a good idea to consider all the benefits and drawbacks of this type of credit.
As with secured loans, unsecured loans come with their own set of pros and cons. We’ve listed the main ones below.
If an emergency arises, you may not have the money saved to cover the cost. In some situations, like a home improvement or a broken fridge, you can’t wait until payday to pay for the repair or replacement.
For these types of cost, you probably won’t need to take out a large bank loan: you may be able to borrow up to £50,000 with an unsecured bank loan. Through My Financial Broker, you may be able to borrow between £500 and £5000 for those expenses where you need the money quickly.
Unsecured personal loans are not intended to be used for long-term financial issues, like loss of employment. Without a regular income, there is no guarantee that the repayments will be made on time, so you could end up paying back more in the long run.
If you are looking to borrow money to pay for other types of credit, this is also not the best option. You may end up borrowing more and more over time, entering into a debt spiral which can be dangerous. If you think you may need to speak to someone about your debts, you can contact companies like Step Change for free.
Borrowing is not generally the best option if you are able to wait to buy something, after saving for it. Taking out a loan means that you’ll be paying back interest, whereas saving won’t cost you any. It can be helpful to complete a budget sheet to work out areas in which you can save money.
Once you click on apply now, the online application form provided by My Financial Broker asks a few simple questions including how much you wish to borrow and how long for. You can apply for bad credit short-term loans from £500 to £5000, to be repaid over up to five years. We will ask for a few personal details, your employment information and your income as well as expenditure details. We understand that you’ll often need quick cash in an emergency, so we’ll try to get back to you as soon as possible.
As a broker and not a lender, we won’t pay the funds directly into your bank, but pass on your details to the lender we match you with. We’ll search our panel of lenders to find the right fit for you, with the best interest rates.
The lender you choose will let you know the total amount you’ll need to repay. If approved, you could have the funds in your account in as little as an hour. So if you’re looking for a same day loan for people with bad credit, we are here to help.
My Financial Broker can help you find loans between £100 and £2000. You can choose to repay over up to two years, so paying back the loan is flexible. We won’t try to tempt you to borrow more so you pay more in interest - it’s completely up to you how much you borrow and for how long. Unlike some brokers, we also won’t charge you a fee for our services.
We’ll try to find the best loan for you, with low-interest rates. You can also save money by making early payments with no extra charges involved.
You may not know what your credit score is like: you can check this for free through sites like Credit Karma. If you have a low score, finding a loan can be a bit more tricky, as a lot of banks or credit card companies won’t be willing to lend to you.
Short-term unsecured loans are often the best option for those with poor credit histories. At My Financial Broker, we understand that not everyone can maintain a consistently good credit rating and circumstances can arise that lead to the occasional default or missed payment.
With this in mind, we are proud to offer alternatives that can assist people looking for bad credit loans. Our lenders will take a view on different credit histories and are more interested in your stable income and your desirability to repay on time and make future repayments.
We only work with responsible lenders, so they will conduct credit checks, but your credit file won’t be the only thing looked at. Your more recent credit history will also be used to make a loan decision rather than transactions that happened years ago.
Even if you don’t have a perfect credit history, My Financial Broker will try to match you with a lender. You may be able to take out loans of up to £5000.
If you have had an unexpected expense, and are looking to borrow between £100 and £2000, you could be able to find the perfect lender through My Financial Broker.
Rather than fill in endless forms with various lenders, simply complete our short form, so that we can do the hard work for you. We’ll do our best to find you an unsecured loan, and if approved by a direct lender, you could have the money in your bank within an hour.Apply Now