Unsecured Personal Loans UK See More Repayments

The UK witnessed more repayments of existing unsecured debt including unsecured personal loans UK than new loans approvals according to statistics released by the Bank of England for August 2010.

The reason why people in the UK were reluctant to take on new loans was attributed to the uncertain economic environment due to the financial downturn. Loan consumers preferred to pay unsecured personal loans UK rather than take new loans due to factors such as job insecurity and low interest rates.

The Bank of England further reported that total consumer borrowing including credit card loans and unsecured personal loans decreased by 120 million pounds. The trend of decreasing personal debt continued for the month of September 2010 according to Markit UK Household Finance Index (HFI) report.

It has also been noted in Markit UK HFI that British citizens were opting to repay debt over saving money. Only those earning above 57,571 pounds had steady levels of savings.

In its Credit Conditions Survey 2010 Q3 Report for the time period 13 August to 3 September 2010, the Bank of England said that defaults for unsecured personal loans UK continued to decrease for the fourth straight quarter.

Lenders of unsecured debt also became more cautious in granting approvals for unsecured personal loans for individuals with bad credit rating, according to the 2010 Q3 survey.

Some financial advisers have approved of the attempts by UK unsecured loan consumers to repay their debt as they feel it minimises any future burden, which the debt might impose on individuals. People with unsecured loans can get caught up in a debt trap in a difficult financial market.

Unsecured Personal Loans UK - An Overview

Normally, loans are granted against a security or collateral owned by the borrower. Typically the collateral or security may be the borrower's house or other assets such as land, car or securities. These types of loans granted by financing organisations are called secured loans.

A security or collateral reduces the risk for lending organisations in case of payment defaults or total inability to pay the loan back on the part of the borrower. Advertisements for secured loans often warn their customers that their homes, which have been put up as security, would be taken over if the borrower is unable to pay the loan amount with interest.

Unsecured personal loans UK, as the name implies, do not need any security or collateral for the loan to be granted to British nationals. These types of loans cater to people who do not own a house or other assets to provide as collateral. An unsecured loan is also referred to as a tenant loan in the UK.

An unsecured loan includes credit card loans and personal loans.

Features of Unsecured Personal Loans UK

Let's take a look at some features of unsecured personal loans.

• Unsecured personal loans are provided on the basis of income, amount of money borrowed and credit rating of the borrower. Your chances of getting an unsecured personal loan are greater if you have a regular income and a good credit score.
• The Annual Percentage Rate (APR) or interest rate for an unsecured personal loan is typically higher than that of a secured loan. This is because the lender considers unsecured loan consumers to be of higher risk than secured loan consumers as in case of payment defaults, the lender has no collateral or security to fall back on to cover the loan.
• The amount of the personal loan and interest rate will be judged by the lender after going through your income status and credit score.
• If you fail to make timely repayments for the loans, the lending organisations may impose late fines. This would also affect your credit score.
• Unsecured personal loans UK lending organisations typically enable borrowers to take loans ranging from a minimum of 3000 pounds to a maximum of 75000 pounds.
• The loan terms may range from a minimum of one year to a maximum of twenty five years.
• Top unsecured personal loan providers may charge an APR ranging from 7.7. % to 9.9%.

Fastest Unsecured Personal Loans in UK

People who borrow an unsecured personal loan usually require it for a personal immediate expenditure such as medical expenses, sudden vacation trips, or purchase of consumer goods.

For borrowers of unsecured personal loans UK, speed of loan approval may be quite important.

There are many online lenders who advertise themselves as providing the fastest unsecured personal loans in UK. Market leaders in the lending sector also provide online loan application submission for such loans. The online loan applications can be completed in a time period of 10 minutes and the loan approval may also be given on the same day or within 24 hours.

There are also loan comparison sites which bring to you a range of options in your search for fastest unsecured personal loans in UK. Some such online loan comparison sites for UK are LoanRater and eComparison

UK Unsecured Personal Loans Bad Credit Rating

Your credit score is very important in determining whether you are a high risk or low risk loan consumer. With the US sub prime crisis and resultant credit crunch, financial organisations became more cautious in giving loans to ineligible borrowers. For UK unsecured personal loans bad credit rating of individuals is a major factor taken into consideration when approving the loans.

A credit rating of an individual can be bad due to

• Payment defaults of previous loans
• Bankruptcy declarations
• County Court Judgements (CCJ) taking action against unpaid debtors
• No regular income

While some lenders of UK unsecured personal loans bad credit rating of borrowers may lead them to reject such applications, others may impose higher APR than normal for such unsecured personal loans.

Some online unsecured personal loans UK providers specialise in loans for people with a bad credit rating.