Product Description
An unsecured loan is one that is obtained solely on your credit history. An unsecured loan does not require collateral, such as property to back the loan in case you default. Unsecured loans can be credit cards, personal loans, bonds, payday loans, or overdrafts.

Main Players
If you have a good credit history then the building societies are the best providers of unsecured loans, and especially the Nationwide, Alliance & Leicester, Halifax and Abbey. Those with a fair credit history might be better off trying Barclays, Blackhorse Personal Finance and Zopa although Abbey have been known to lend as well. For people with a poor history the options are more limited and include Everyday Loans and FLM, both of which are internet based companies.

Pros of Unsecured Loans

• There is no risk to your property should you default on your payments.
• There are multiple lender options so you should get the best deal possible.
• Chance of getting a higher loan amount (if creditworthiness allows)

Cons of Unsecured Loans

• Usually the interest is higher on Unsecured Loans than Secured Loans because there is no collateral.
• You have to continue making payments even if something happens and you are unable to find the money.
• Loan amounts do tend to be smaller, especially if you do not have excellent credit ratings.
• There are generally quite a few restrictions on the loan terms, including early repayment fees.

Things to Consider When Choosing a Provider
Unsecured loans are often through credit card companies, banks, or payday loan advances. If you need an unsecured loan your best option is to go through a reputable company. There are no regulations on payday loan companies, which mean they can charge astronomical interest for a loan of two weeks.

Credit card companies tend to offer you a credit line of a certain amount based on your credit risk to them. They also have the fastest approval rates as they can give you a decision in 60 seconds or less. However, credit cards may not be taken everywhere and sometimes they do not have a high enough credit limit for your needs.
Banks and building societies are the toughest unsecured loan lenders. They prefer to offer secured loans. They will however, consider an unsecured loan based on the time period you have been with the bank, your usual bank balance per month, and your credit scores. Your credit scores need to be excellent for a bank. They also require that the loan repayment is less than 50 percent of your income.

When you consider an unsecured loan you do have to weigh time constraints, the amount of the loan, and the interest rate you will be charged. This will determine what type of provider you will be looking for.

BUYability Summary
Unsecured loans are the toughest type of loan to be awarded. They are also more difficult to pay back if you experience a loss of job or other issues in your life. The lack of collateral still means you are responsible for the loan, but this time you may not have something to sell in order to repay the loan. Credit cards as unsecured loans give you the most room for repaying the loan amount because you just need to pay the minimum balance each month.