Unsecured loans are also known as personal loans. This involves borrowing money from a bank or other lender. You agree to make regular payments until the loan is repaid in full, together with any interest owed.
If you’re late with a payment or miss one altogether, you might be charged a penalty fee and a negative mark recorded on your credit file.
If you can’t afford to repay, always ask your lender for an alternative repayment plan. If you don’t, as a last resort, the lender can take you to civil court to try and get their money back.
See how to find the best personal loan deal.