What is an unsecured personal loan?

An unsecured loan is a type of personal loan in which money is borrowed from a bank or lender, with the intention of being repaid in the future. They are usually used for one off purchases such as a car repair, home improvement or to consolidate debt.

Here at 118 118 Money, we offer unsecured personal loans from £1,000 to £5,000 over 1 to 2 years with fixed monthly repayments.

What’s the difference between secured and unsecured personal loans?

Unlike a secured loan, which uses an asset such as your car or house fixed against the loan, an unsecured loan is not secured against any asset. Unsecured loans are supported by your creditworthiness and affordability of repaying the loan, rather than by collateral.

If you miss payments then it will affect your credit rating and can cost you money in fees depending on the lender, but you aren’t at risk of losing your house or car.

Secured loans are generally higher in value, over longer repayment terms and at cheaper interest rates. But if you regularly miss payments and/or cannot pay the secured loan back, the creditor could take possession of your asset.

Why choose an unsecured personal loan?

An unsecured personal loan can offer a lifeline in an unexpected situation you didn’t see coming. Whether you need to pay for unexpected car repairs, a necessary home improvement or maybe you need to consolidate other debts; an unsecured personal loan could help you get you back on your feet.

Needing a loan for a car repair or unexpected bill is never welcome news, and can leave you short on money for essential items such as other bills and living costs; this is where taking out a personal loan could ease your financial worries.

How can a personal loan help to consolidate debt?

Taking out a loan to consolidate your debt could be beneficial as it may actually reduce your monthly repayments, help you get out of debt quicker and make your financial position stronger.

Repaying your loan in monthly instalments demonstrates your ability to pay off debt to future lenders, which in turn increases your chances of getting credit further down the line.

Taking out an unsecured personal loan could be a conscientious financial decision that provides you with a more structured and transparent repayment plan, so your debts can be more manageable and affordable.

It should also be remembered that repaying borrowing over a longer term may increase overall interest charges, so if you are consolidating and extending the term of your borrowing, consider this.

My credit record is not great, can I still apply?

If you have less than perfect credit history and want to borrow money with fixed monthly repayments, our unsecured personal loans at 118 118 Money might be the right option for you.

At 118 118 Money, we always look for solutions so that our customers can borrow money when they need it most.  We lend responsibly – which means we only issue customers with loans that they can comfortably afford to pay back over 12, 18 or 24 months.

But if you‘re worried about the impact a rejection may have on your credit rating or have been rejected in the past, you can try our QuickCheck. Our Quickcheck will not affect your credit rating and will give you an indication beforehand whether you’re likely to be accepted for a loan or not with us.

Checking your credit history

Most lenders like to see your credit history and will check your credit score after you have submitted an application. You can check your credit file before applying for a loan by using agencies like ExperianEquifax or Callcredit.

You should look after your credit and take some time to check your credit score and credit report before you apply for a loan. Multiple loan applications will affect your credit file so it’s best to get the application right first time by making sure your credit report is as good as it can be.

Alternatives to unsecured loans

Before applying for any form of credit, it’s worth taking time to consider other options. If you’re looking to borrow a lower amount of money for example or looking to purchase items, then a credit card might be a better option.

Credit cards are a way to borrow money with balance transfers or using the card to make purchases. They are more suited for shoppers and those looking to switch cards to transfer their balance onto a lower annual percentage rate (APR).

The advantage of a credit card is that it can be used at almost any time for a variety of purchases, given that you have enough credit available. Many lenders offer special promotion offers too, however it’s important to be mindful that once the promotional offer ends, the APR can be high.

Taking out multiple credit cards could also lead to spiralling debt. Because there’s no fixed end date with a credit card, it means you could be saddled with debt for years to come. If the card is on a variable rate of interest, you won’t know what your future repayments will be either.

It’s useful to have a credit card available, but if you want to avoid paying interest on it then make sure you can repay the balance in full by the payment due date.

Try us first

If you have taken time to consider your options and decided that an unsecured personal loan is the right option for you, then it’s important to make sure you get the best deal. That’s why at 118 118 Money, we’ll guarantee to keep your loan offer valid for up to 5 days so you can have time to shop around for the best deal for you.

In order to apply for a loan with 118 118 Money, you must be aged between 18 and 70, hold a current bank account and debit card, and have a consistent monthly net income of at least £700 per month. It’s important to understand that other lenders may have other criteria.

The 118 118 Money team will give you honest and transparent advice and our fantastic customer service team love to make customers smile.

How do I apply?

Once you find out your eligibility with our QuickCheck, simply decide to apply to receive an instant decision on your unsecured personal loan.

You’ll be asked for the following details:

  • Full name
  • Contact details
  • Address history for the past three years
  • Income and outgoings

If you need a hand in getting an idea of how much you could afford to borrow, try out our free to use loans calculator. You can also use our budget planner to see how much you spend each month on essentials such as bills, rent, food etc.

Please ensure your application is as detailed and honest as possible, as this will help your chances and speed up the application process. If all is well, you could get your cash within 24 hours.

Representative example: Amount of credit £1,800 for 24 months. Interest rate: 71.3% pa (fixed). 24 scheduled monthly payments of £142.65. Total amount payable: £3,423.67Representative 99.9% APR. 

Rates from 35.9% APR - 99.9% APR fixed.