An unsecured loan is when you borrow money from a lender over a set term. The loan amount is then repaid in monthly instalments, with a fixed rate of interest.
secured loans, unsecured credit isn’t tied to any of your assets, such as your home or car.
Secured vs. unsecured loans
The main difference between a secured and an unsecured loan is the consequences of failing to make your monthly repayments.
If you fall behind on or miss your unsecured loan repayments, you could be charged additional fees.
Failing to pay a secured loan may result in the lender seizing the asset tied to the loan, known as the collateral, to cover their losses.
Whether it’s a secured or unsecured loan, your lender will report a missed repayment to the credit reference agencies (CRAs), and your credit rating will decrease. This could make it more difficult to be approved for financial products, such as a loan, credit card, or a mortgage, if you need to apply again in the future.
It’s important to remember that every lender is different, and to find the best option to suit your circumstances, you should do thorough research before applying for any financial product.
Can I get an unsecured loan with CashLady?
CashLady only works with lenders of unsecured loans.
If you’ve been hit with a financial emergency, CashLady could help you search for an unsecured loan from £100 to £10,000, with a repayment term from 3 to 60 months, depending on the amount of money you apply to borrow.
To search for an unsecured loan with CashLady, you must:
- Be over the age of 18;
- Be a UK resident;
- Have a UK bank account and a valid debit card; and
- Have a regular source of income paid into your bank account.
Why you might be considering an unsecured loan…
- Without an asset to evaluate, an unsecured loan could be more straightforward to apply for.
- An unsecured loan could help cover the cost of home improvements or financial emergencies, such as a packed-up boiler or a broken-down car.
- Loan terms could range from 30 days up to 5 years – ideal if you would like to borrow over a shorter period. The minimum loan term at CashLady is three months, and the maximum is 60 months. The loan terms available to you will depend on the amount of money you apply for and are approved to borrow.
- Unsecured loans usually come with fixed interest rates, so you will be able to keep track of exactly how much you owe each month.
- Successfully managing your monthly repayments and clearing the balance of the loan within the set term may have a positive impact on your credit rating. This will depend, however, on how you manage any other credit commitments you may have.
- If approved for an unsecured loan, the money could be in your account the same day. This will depend on your lender and the terms and conditions of your bank.
Things to bear in mind…
- Unsecured loans are seen as a bigger risk to lenders, as there is no collateral attached.
- The interest rates on unsecured loans tend to be higher than they are on secured loans.
- Missed and late repayments could lead to late payment charges, further interest, a decline in your credit rating, and financial strain. We’re not trying to frighten you here; we would just hate for anyone to find themselves in a stressful financial situation. When you feel as though you’re in a position where you need money fast, it’s essential to take a step back, weigh up the pros and cons, and evaluate the situation. Committing to any financial product requires careful consideration.
- Before you apply, it’s worth asking yourself if you really need credit. If repayments are not managed correctly, you risk falling into a cycle of debt. Saving up may take longer, but it could be a more financially secure option.
- Never borrow more money than you actually need or can afford to repay.
- When you apply for a loan with a direct lender, they will carry out a creditworthiness assessment to gain insight into your financial history. This will involve either a hard search or Open Banking. A search will be visible on your credit file to other lenders for up to 12 months. Multiple hard searches over a short period could lower your credit rating.
Could I get an unsecured loan for bad credit?
You can search for an unsecured loan, even if your credit history is less-than-perfect.
While it may be more difficult to get approved, there are lenders – including several on the CashLady panel - who specialise in unsecured loans for bad credit, although you could be subject to higher interest rates.
To check your credit rating and view your report, head to Experian, TransUnion or Equifax.
Just so you know: once your initial 30-day free trial period expires, you’ll be charged £14.95 per month for Equifax. If opting for the more in-depth view of your credit file rather than the basic view, you’ll be charged £14.99 a month for Experian. TransUnion is a free service.
How much does an unsecured loan cost?
If your application is approved, you will agree to pay back the entire loan amount, plus interest, over your fixed term.
The amount of interest you’ll pay depends on the Annual Percentage Rate (APR) and the term of the loan, and will be decided based upon factors such as your credit score and affordability.
Can I use an unsecured loan to pay off existing debt?
An unsecured loan could help you consolidate existing debt.
However, this can be a complex subject, and there are various factors that you’ll need to very carefully consider and research. For a general overview, take a look at our Debt Consolidation page.
Consolidating debt may not be an option for you if your credit history is poor. If you would like free, impartial advice about debt consolidation, you can talk to StepChange in confidence.
Not sure where to start, or whether you need debt advice? Take the free, 60-second Money Health Check quiz.
Should I use a credit broker or go directly to a lender for my unsecured loan?
This is entirely up to you.
Credit brokers like CashLady present your one application to a panel of trusted lenders all at the same time, which may save you time.
If you do choose to bypass the broker, please be sure to only apply with reputable lenders.
In the interest of keeping you safe, it’s a good idea to run a few safety checks beforehand.
Ensure that the lender’s website is both legitimate and secure. Any reputable lender should be authorised and regulated by the Financial Conduct Authority (FCA), and you can search the FCA register here.
CashLady do not charge a fee to use our services, and we will never contact you to offer you a loan. Scammers often use legitimate company names to deceive their victims, and may attempt to reach you by text, email, or phone call. You can read more about scams and how to spot and avoid them in our blog.
Before you search for an unsecured loan
Searching and applying for a loan can be nerve-wracking, especially if you’ve been turned down for credit in the past. Feeling apprehensive? We understand – and you’re right to find out as much information as possible before you commit to any credit agreement. Why not have a look at our FAQs before you make a decision, just to make sure that a loan is the best option for you?
Searching for an unsecured loan: the CashLady process
We’re pleased that you’ve chosen CashLady as your credit broker, and we’re excited to share your journey with you.
If we’re unable to find you a suitable unsecured loan, we may still recommend other products and services, such as credit builder tools. Some of these services may charge a monthly fee if you choose to use them.
Our online application should take no more than five minutes to complete. The information you provide will enable us to complete our soft search and look for a loan that could be suitable.
Don’t worry - our soft search will only be visible on your credit report to you, not to other companies, and it will not impact your credit score.
I’ve been matched with an unsecured loan through CashLady; what happens next?
If a search with CashLady reveals that you’ve been matched with a loan product, you will be redirected to the lender, where you can decide whether you’d like to complete your application.
You might be required to provide some further information; this may include proof of address or recent payslips. Your lender will also complete a full credit check, known as a creditworthiness assessment. Remember, a hard search will show on your credit history. Multiple hard searches in a short space of time will harm your credit score.
If you successfully pass the lender’s creditworthiness assessment, you’ll be formally offered the loan. Once you’ve read the terms and conditions – which will have been sent to you at some point during the process - and you’re happy with the loan amount, term, and interest rate, you can accept the offer.
I’m struggling to make my monthly repayments – what can I do?
Please contact your lender as soon as possible. There may be things they can do to help ease the financial burden.
You can access free, confidential debt advice and support through websites such as Citizens Advice, MoneyHelper, National Debtline and StepChange.