How to Choose an Unsecured Loan Company

An unsecured loan company lends money to new and existing customers without the provision of collateral. You can use the money to consolidate debt, buy a new car, perform home improvements, go on holiday or finance a new business. The list is only limited by your imagination.

Eligibility guidelines have been tightened in recent years, so you're going to need to good credit history to get approval. That means that you must have paid your credit agreements punctually and mustn't be over-extended financially. Lenders don't want customers who are likely to default on their credit agreements.

Annual Percentage Rate (APR)

The first thing that a customer will notice is the APR because this determines how much interest they'll pay each year. For example, if you take out an unsecured personal loan for £10,000 from Nationwide over 5 years at 6.5% APR, you'll repay a total of £11,678.40. However, the same loan from Yorkshire Bank has an APR of 8.9%, so you'd repay £12,339.34. Use a price comparison site, such as moneysupermarket.com, to find the lowest rates.

Early Redemption Penalties

If your circumstances change, you may decide that you wish to repay your unsecured cash loan early. This is good for your bank balance, but less profitable for the bank. If you do decide to repay the money you've borrowed early, you'll pay a penalty to cover the cost of administration. Most customers don't check this until it's too late to do anything about it.

Term of Repayment

Most loans can be repaid over 5 years, but some cash loan lenders are prepared to extend the repayment term to 7 years. You may even be able to take a 3-month repayment holiday. Remember that extending the term will lead to the repayment of more cumulative interest over the life of the loan.


If you need the funds for an emergency, it's important to find out how long it will take before the funds will reach you. You're likely to find that payment is a lot quicker if you already have a current account with that bank.

Customer Service

The way an unsecured loan company treats customers is important because things rarely go as smoothly as we'd all like. Are they helpful and easy to reach? Are they located in the UK? Do they use premium rate telephone numbers? Are the sympathetic if you run into financial difficulties? Call the number for existing customers and see if you get through as quickly as you do on the number for new customers.

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