Personal Loans or Unsecured Loans do not use your home as security. This means that if you get into difficulties and you fail to pay the loan, the lender cannot repossess your home. Even so, you are legally obliged to pay back the loan as you agreed.
As with Secured Loans, you borrow a fixed amount and have to repay it in fixed instalments over a set period (the term). You’ll be charged interest on what you borrow. The APR (Annual Percentage Rate) tells you the cost of the loan taking into account the interest on the loan and other charges. The APR you are offered will usually depend on your credit score
Because this type of loan is on "trust" it is given at a higher level of interest. An Unsecured Loan can be an expensive way to get credit, but can be useful over a shorter period even if you are a homeowner.
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