An unsecured loan is a personal loan which does not require you to offer collateral to back the loan, in contrast to secured loans which require you to use your home as collateral.
People who use unsecured loans are generally those who are not in a position to offer to collateral, i.e. people who don't own a home or have adverse credit records, CCJ's, mortgage arrears or debt issues. Although you aren't required to offer your home as collateral, it is worth highlighting that many a loan company still require you to be a home owner in order to be eligible to apply for an unsecured loan.
Benefits of Unsecured Loans
- Less risk - not securing against your assets
- Very quick turnaround - after applying, you can be accepted very quickly
- Very high success rate of applicants
- Adverse credit records, CCJ's, mortgage arrears or debt issues will not affect your application
Unsecured personal loans can be used for a variety of reasons, including:
Home improvements
Debt consolidation
Mortgage arrears
Car finance
Adverse credit