When it comes to unsecured online loans there are many options available to you, so you really do need to do your homework to make an informed decision. The great thing about an unsecured loan is that you don’t need to put up any collateral, such as your house or car, to secure the loan, but due to the lack of collateral the interest rates tend to be higher than that of secured loans.

Once you have decided how much you wish to borrow, the first thing to look at when choosing a lender is the total amount you will end up paying back. Take note of charges other than just the interest rate e.g. administration or bank transfer fees, and be sure to add these on to find the total cost of borrowing. It’s also worth checking the late payment policy (including penalties) that the loan provider has in place, just in case unforeseen circumstances arise. Online lenders have a set of criteria to assess loan candidates such as being 18 and over and having a debit card and UK bank account. Other aspects that lenders look at are character including criminal records, proof of income and your credit history. The credit history considers such things as late loan payments and defaults. So before applying for a loan ensure that you meet all of the lender’s criteria.

The type of online loan provider to choose depends on the amount you wish to borrow and for how long. Online banks (including many of high street banks that also operate online) can provide £5,000 to £25,000 for a period of 2 to 7 years with an APR of around 10%. Short term lenders or payday loan companies provide small loans with larger interest rates but you pay these back on your next payday.

Since payday advance lenders vary its worth taking a look at our payday loans directory to find one that meets your needs. One short term lender that stands out is Wonga.com for its flexible loans and transparent cost structure. Payday advance loans have dramatically increased in popularity since mid 2007, largely due to the economic downturn, so be sure to look for transparency amongst the vast number of lenders out there.

This entry was posted on Wednesday, February 3rd, 2010 at 5:48 pm and is filed under Apply for a loan, Online loans.