Unsecured Finance is generally known as ‚low risk‘ to the consumer as the funds can be obtained without securing any property against the loan. This type of loan is perfect for individuals who do not own their own property as well as for tenants, students and even homeowners who don’t wish to risk their own property. Lenders place a huge amount of trust in the consumer to repay the debt according to the agreement made and one way in which the Financial Services measure this trust is by looking at the borrower’s credit rating and history. Unsecured Loans have much higher interest rates than other forms of loan as this is a way for the lender to secure his capital return. Unsecured Loans are very much a ‚last resort‘ option and great if you need the money to fill in the gap of short fiscal need. They also often come under various guises including: ‚Personal Loans‘, ‚Tenant Loans‘, ‚Pay-Day Loans‘ and ‚Car Loans‘ to name but a few. This is because Unsecured Loan payments can be used for almost anything, from unexpected healthcare expenses to paying for that dream holiday or ideal car.

Unsecured Loans are often regarded as a hassle free form of financial assistance as not only do they pose no risk to your property, but the money can usually be obtained on the same day as application. Unsecured Loans are designed to lend smaller amounts of money, usually below 10,000, and therefore have much shorter repayment terms than most other forms of loan. With an unsecured loan, the maximum lending amount is typically 25,000 from most UK Lenders. Lenders determine an unsecured loan agreement depending upon the borrower’s personal circumstance and therefore payment breaks can be arranged and repayment terms can be designed around the borrower’s financial need.

As mentioned above, an unsecured loan is determined by the consumer’s credit history, which is not so great news for people with bad credit. However, the recent advent of ‚Guarantor Loans‘ has made getting an Unsecured Loan much easier if you have bad credit. A Guarantor Loan involves the borrower choosing an individual who is willing to secure the loan in their name, hence, guaranteeing that the money will be repaid to the lender even if the borrower cannot, for whatever reason, repay it. This type of loan is also ideal for young people and students and it’s rapidly becoming one of the most popular finance products in the market today. For most lenders, the guarantor has to be at least 21 years old, a homeowner and have a decent credit history. Guarantor Loans are provided solely based upon the assessment of the guarantor’s credit history, no credit checks are made on the borrower themselves.

However, with the current economic downturn, obtaining an Unsecured Loan or a Guarantor Loan is by far a walk in the park. Cheap, flexible unsecured loans are becoming notoriously difficult to come by as lenders are much more selective about who they will lend to. Nonetheless, most Lenders can be found online, for example, online Guarantor Loans usually provide loans of around 3000. Although, the increased absence of lenders in the market means it’s all the more important to research all the options available for your circumstances. As with most things found over the internet, you must be careful that the lender you intend to deal with is indeed a real lender; this can sometimes be more taxing than finding the best interest rates!

There are recent concerns over interest rates on personal loans after reports were made last month claiming that the banks were intentionally raising interest rates in an attempt to get more money off the consumer. The claims suggest that the lenders have increased their personal loan interest rates by 1%. This is surprising with the current base interest rate being at its lowest ever level at 0.5%. Over one million consumers are said to have opted for an Unsecured Loan last year in a bid to consolidate their outstanding debts. Although there are worries that if interest rates are to increase any further unsecured loans are likely to reach an unaffordable level for many individuals in the UK. As with all types of loan, it is strongly recommended that you consult a financial advisor before agreeing to an online unsecured loan. As a borrower for this form of loan, you must be a full British Citizen and be over the age of 18.

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