UK Unsecured Loan Guide

In the UK today, those looking for an unsecured loan have, broadly speaking, four different routes they can go down (excluding credit cards which are arguably a fifth option but not covered in this article). Here are the options:

High Street Banks

Through 2011 there has been a surprising “rate war” between lenders to offer the best rate. Supermarkets like M&S and Sainsburys are trying to gain a foothold in the consumer lending market and so are offering some competitive deals, last at about just under 7%. At time of writing though (Sept 2011) Nationwide have retaliated with a market beating 6.2% rate. However, the catch here is that very often to qualify for these rates you have to be a customer and even then they are very picky about who they choose. As little as one late payment on your record could invalidate you from these loans. If you can get a loan from a High Street bank though, it’s probably your best option. Unfortunately for us though, the High Street banks don’t talk to brokers so we can’t help you with this; you’ll need to go direct – good luck!

Private Lenders

If you don’t qualify for High St Bank loans there is the Private Lending market where self-funded institutions have been doing well in recent times. The criteria are more flexible but at a price! At time of writing (Sept 2011) APRs for the best credits start at about 21% and go quickly higher from there and can even reach several hundred percent! Is this wrong? It’s not for us to say as it is down to each individual to decide whether these rates are better than no loan at all but we do encourage all clients to be aware of the total cost of credit before accepting a loan. Our online system gives you access to a panel of about 6 such lenders granting loans from £100 up to £10,000 for terms of 1 week up to 5 years.

Guarantor Lenders

Another market that has seen phenomenal growth during the credit crunch is the Guarantor market. If your own credit is not strong enough to achieve the loan you require but if you can get someone of a better credit standing (partner, family member or VERY good friend) to guarantee your payments then you could be eligible for a Guarantor loan. Rates start at about 40% APR and amounts of up to £5,000 can be borrowed.  Our application form will also give you access to several Guarantor Lenders.

Peer-to-peer Lending

The silver lining to this credit crunch “cloud” has been the emergence of Peer-to-Peer lenders as a credible borrowing option. How does it work? Well, instead of borrowing from greedy bankers, these websites allow you take an unsecured loan from other private individuals who are looking for a better return on their money than the banks currently offer. The websites manage the credit checking and repayments and to you the Borrower, it looks and acts like any normal loan. Our experience has been that these Lenders offer among the most competitive rates on the market and you can borrow between £1,000 and £15,000 on flexible terms with no Early Repayment Charges up to 5 years! We strongly suggest you check them out and see our Personal Loans page for some options.

These are the options but, to be honest, it’s not easy out there. The one further piece of advice we would give is not to apply to too many places as all these searches leave a footprint on your credit record. Pick the option most suitable for you and best of luck!