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What is an unsecured loan?
An unsecured loan is a loan where no asset is pledged as security for the loan. (The most frequently used security is the family home.)
What if my loan application is not accepted?
Sometimes a lender may not wish to give you a loan. This may be for a number of reasons, however the lender is not obliged to tell you exactly why the loan been refused.
How do I make repayments and can I choose my monthly repayment date?
Your repayments will normally be taken from your bank by direct debit on a monthly basis. This means that you must have enough cleared funds in your account on the due date, or the payment will fail and you will have missed a payment.
Can I cancel my loan application if I decide not to go ahead for any reason?
If you decide you want to cancel your loan application once you have made it, you can do so within a certain period of time set by the loan company.
I have not been with my current employer very long, can I still apply for a loan?
To apply for an unsecured loan you will normally need to provide 3 consecutive pay slips to prove that you have a regular income.

I live at home with my parents, can I still apply for a loan?

If you live at home you are still eligible for a tenant loan - this is basically an unsecured loan in which you have no property to provide as security against the debt.

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To be eligible you will have to be over 18, and also in full employment. Because you will have to apply for an unsecured loan, you will only be able to borrow up to £25,000, and you will be subject to higher interest rates than with a secured loan.

You may have trouble getting credit if you are 18 and have never borrowed money before - because you will have no credit history. Some loan companies will not lend to those with no credit history, as they cannot fully assess their risk. Your application may therefore depend on the credit history of your parents. If they have a good credit history that may help your application, and if they have a bad credit history your application may be adversely affected. Lenders often look at the credit history of other people at your address, and they may think that you are borrowing the money simply to provide another person in the house with credit, and reject your application for this reason.

To avoid any of these circumstances it may be best to use your bank or building society for your first loan. Once you have successfully gained credit you will have a credit history and will in future be able to obtain finance from any loan provider.

 

Risk Warning
Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. Security by way of a charge on your home may be required.
Think carefully before securing other debts to your home.