Unsecured loans or personal loans are often used for small value purchases.
Unsecured loans are better suited to small amounts of borrowing as they are usually set at a fixed interest rate over a fixed repayment term.
Unsecured loans are typically used for:
- Debt consolidation
- Home improvements
- Car financing
There can be benefits to taking out an unsecured loan, one of which is that if you stick to your monthly repayment plan, it can help improve your credit score. By improving your credit score it can make it easier to get credit again in the future, whilst also potentially increasing the amount lenders are willing to let you borrow. It can also affect the interest rate they offer in relation to the personal loan you are asking for.