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Unsecured Loans

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Finding an Unsecured Loan Lender

If you already know that you want an unsecured loan, but are struggling to find a lender, click the button below to go to our quick and easy personal loan and mortgage guide. It will help you understand how you look to a lender, and how your circumstances match up to potential lender criteria.

What is an Unsecured Loan

The first thing to mention when talking about what an unsecured loan is, is to mention that there are different types of unsecured loan. The three most common types of unsecured loans are personal loans, student loans and credit cards, all of which could be either revolving loans or term loans.

Revolving loans

A revolving loan is a type of loan where there is a set credit limit. So, you can use this loan up until the credit limit, what you have spent is then repaid, and then you can once again use this loan up to the credit limit. Most credit cards and some types of personal lines of credit are examples of revolving credit.

Term Loans

A term loan differs from revolving loans in that the borrower will repay the loan in instalments until it is fully repaid. While this type of loan is normally associated with secured loans and mortgages, it is possible to get unsecured loans with this repayment type. One example of an unsecured term loan is a loan to buy furniture or white goods. Another is a straight forward cash loan available for most legal and ethical purposes.

An unsecured loan is a type of personal borrowing that is not secured against an asset. They are offered by a wide variety of lenders, such as banks, credit unions and online lenders. An unsecured loan could be in the form of a personal loan, student loan, credit cards and more.

Generally, unsecured loans may have higher interest rates than secured loans. This is because they are much riskier for lenders, as there is no collateral for lenders to use to recover outstanding debts if you are unable to keep up with repayments. Eligibility is often very reliant on the borrowers credit score. However some lenders don’t rely on credit score which is good for people who don’t have perfect credit.

Secured vs. Unsecured Loans

Unsecured loans differ from secured loans in one main way. All secured loans have an asset involved in the deal which is used as collateral. This means that if the borrower cannot keep up with repayments, the lender can take possession of the asset to recoup their money. With unsecured loans, there is no collateral, so they are seen as much riskier by lenders. Due to the increased risk involved with unsecured loans, often they have higher interest rates, and it is usually harder to get approved for an unsecured loan.

Pro’s of an unsecured loan

  • You don’t need collateral
  • Usually a fast process
  • Less restrictions on borrowing
  • Good credit borrowers may be offered competitive rates

Con’s of an unsecured loan

  • If you default on payments you could be taken to court
  • Lower credit score borrowers may not be eligible
  • Lower credit score borrowers may have less competitive interest rates
  • Can be harder to get approved
  • Usually over a shorter period so much costly each month
  • Only intended for smaller loan amounts. Most lenders cap at £15,000 to £25,000 and many only lend £1,000 to £7,500.

Unsecured Business Loans

Unsecured business loans are an option for business to gain funding for a variety of purposes. These could be for cash flow, growth or more. Over the loan term the business is then expected to repay the loan, and any interest that gathers on the loan.

As these loans are unsecured, no business assets are used as collateral. This means that neither your personal or business assets are at risk. Additionally, no asset valuation is needed, which may help speed up the process.

Lenders will generally rely on your credit history and the business accounts but there are lenders which don’t. However, expect less generous terms from these lenders

It’s important to remember that if you default on an unsecured business loan, this can have a massive impact on your businesses credit score. As well as that, your business could still be taken to court if your lender attempts to reclaim its money. Bare this in mind when applying for an unsecured business loan, it is NOT free money.

What happens if you default on an Unsecured Loan

If you don’t keep up with your repayments on an unsecured loan, it’s known as defaulting. While unsecured loans don’t have any collateral that you could lose, if you fall behind on your payments it could have massive impacts on your credit and your finances. 

If the borrower has a change of circumstances, and is unable to make repayments, the lender may choose to take the borrower to court in an attempt to recover their money. But, in this situation some lender MAY choose to just live with the losses. If the lender takes the borrower to court, they may be able to claim some of the borrower’s assets to pay back the debt.

If you make a repayment 30 days or more past the due date, then this will lower your credit score. This late payment will also stay on your credit report for six years. The lender also has the possibility of taking legal action against you, or putting your account into collections. These will also stay on your credit report for six years. This means that you may struggle to borrow again in the future, as having late repayments or non-repayments are a major red flag for lenders.

Lenders Requirements

There are a lot of criteria that you will have to fulfil before they will consider offering you a loan. These criteria are to limit the amount of risk that the lender is taking on, and to make sure you can actually repay the loan. As there are such a wide range of lenders, it is very hard to pinpoint exactly what lenders are looking for, but below are some of the essentials.

Credit History

When lenders are looking into your credit, they are looking for how you have dealt with and managed loans and credit in the past. They typically look one or more years in the past to see if you have a history of responsible credit use. This will include on time payments, a mix of account types and low balances on credit cards. They also check your credit scores, or generate their own. These are calculated from the information kept in your credit report. The higher your credit score, the more likely you are to qualify for better rates and loan terms.


Proving your income is very important, as lenders need to know you have the ability to meet your repayment obligations. So, lenders will look for proof of stable income that is enough to cover all of your existing debts as well as the loan you are applying for.

Debt to Income ratio

Following on from your income, your debt to income ratio can help lenders decide if you are a viable prospect to lend to. To calculate your debt to income ratio, you have to take all of your monthly debts, and divide that by your monthly income. For example, your total monthly debt totals £1,000, and your monthly income is £3,000. So, 1000/3000 is 33.3%. So, your debt to income ratio is 33.3%. The lower your debt to income ratio, the better. Most lenders will have a maximum debt to income ratio they will consider, but it depends on the lender. The usual maximum is 43%.


While an unsecured loan does not use any asset as collateral, lenders may still want to know if you have any savings. This will show that even if your income circumstances change, you will still be able to maintain loan repayments.

Applying for an Unsecured Loan

First of all, you need to decide how much you need to borrow. When you’re doing this, don’t borrow more than you need! This could end up costing you a lot of money in interest repayments. Remember a loan is NOT free money.

Finding the lenders

Next, you need to find a lender willing to make an offer. There are lots of lenders out there who offer unsecured loans. However, you need to find the lender most suited to your circumstances. Compare between banks, both local and national, online lenders and credit unions to find the best lenders for you.

If you don’t have a good credit score BEWARE. Applying to numerous lenders and being declined is likely to drag your score even lower.

It may better better to approach a finance broker who will usually have a panel of lenders. They can narrow which lenders are most likely to help you. This not only saves time. it also helps protect your credit score.

Pre-qualification and comparing offers

Assuming your credit is pretty good, once you’ve identified a few lenders, you need to compare the offers. Some unsecured loan lenders offer pre-qualification. This means that you can see which loans and offers you may qualify for before you actually apply. If you are able to do this, compare interest rates, loan terms, fees, the amount offered and any extra features.

Time to apply

If you have decided on the right lender for you, it’s time to submit your application. Normally, this can be done online or over the phone, and sometimes even in person. Make sure you are being honest with the lender, don’t try to hide any unfavourable circumstances.

While you’re applying, the lender may ask for additional information. If they do, provide it as quickly as possible to keep the process moving along. 

After all of this, if you are approved, then the lender will inform you how you’ll be accepting the funds. Depending on the loan type, you will either receive it as a lump sum, instalments or in the form of a credit card.

Check your credit

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It will help you understand what the lenders see and help you choose the right product or service for you.

Click Here to get your free Multi Agency credit search.

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Promise Money is a broker not a lender. Therefore we offer lenders representing the whole of market for mortgages, secured loans, bridging finance, commercial mortgages and development finance. These loans are secured on property and subject to the borrowers status. We may receive commissions that will vary depending on the lender, product, or other permissable factors. The nature of any commission will be confirmed to you before you proceed.

More than 50% of borrowers receive offers better than our representative examples

The %APR rate you will be offered is dependent on your personal circumstances.

Mortgages and Remortgages

Representative example

Borrow £270,000 over 300 months at 7.1% APRC representative at a fixed rate of 4.79% for 60 months at £1,539.39 per month and thereafter 240 instalments of £2050.55 at 8.49% or the lender’s current variable rate at the time. The total charge for credit is £317,807.66 which includes £2,500 advice / processing fees and £125 application fee. Total repayable £587,807.66

Secured / Second Charge Loans

Representative example

Borrow £62,000 over 180 months at 9.9% APRC representative at a fixed rate of 7.85% for 60 months at £622.09 per month and thereafter 120 instalments of £667.54 at 9.49% or the lender’s current variable rate at the time. The total charge for credit is £55,730.20 which includes £2,660 advice / processing fees and £125 application fee. Total repayable £117,730.20

Unsecured Loans

Representative example

Annual Interest Rate (fixed) is 49.7% p.a. with a Representative 49.7% APR, based on borrowing £5,000 and repaying this over 36 monthly repayments. Monthly repayment is £243.57 with a total amount repayable of £8,768.52 which includes the total interest repayable of £3,768.52.



Promise Money is a trading style of Promise Solutions Ltd – Company number 04822774
Promise Solutions, Fullard House, Neachells Lane, Wolverhampton, WV11 3QG

Authorised and regulated by the Financial Conduct Authority – Number 681423
The Financial Conduct Authority does not regulate some forms of commercial / buy-to-let mortgages