An unsecured loan is just as likely to be called a personal loan; the word unsecured might be a bit confusing. However, it is not. Unsecured simply means that when you borrow the cash you don’t have to offer any security or collateral such as your home or other assets.

You could just apply to your bank or building society for an unsecured loan or you can use one of the online comparison websites to find the cheapest loans. With unsecured loans the interest rate is generally fixed for the period of the loan so the monthly repayments always remain the same, just compare like with like and look at the APR (annual percentage rate) before making any kind of decision. The APR usually depends on the amount of the personal loan and sometimes the term as well, meaning the best rate for one personal loan amount may not be the best rate on all.

A lump sum is lent in return for you agreeing to make regular repayments, usually by direct debit as you didn’t have to offer any kind of security or collateral. Personal loans are available from £500 up to £25K, being repayable over a period of time, usually between six months and 10 years.