When expenses go haywire, taking credit makes sense. Typically, the best loan deal for any loan seeker would be the one that affirms:

# No deposit against the loan amount + lowest possible APR
# Quick and simple loan approval procedure
# No immediate risks in the event of a default

This is when a cheap unsecured loan comes into the picture. The most attractive feature of an unsecured deal is no collateral, i.e., the borrower does not need to offer his asset as security against the loan amount. This unique feature makes it suitable for:

# Tenants - who have nothing significant to pledge
# Homeowners - who do not wish to risk their priced asset

As the purpose of collateral is to cover the risk factors attached to loaning, unsecured deals involves risks for the creditor. However, because of the growing demand for low-cost loans, many lenders are offering cheap unsecured loans UK at the lowest possible APR’s.

To get the lowest possible APR (nominal rate + loan processing charges), the borrower needs to have a good credit history (past two years) and sound payback ability (current financial position). The average APR varies from 7.4% to 41%, depending on the borrower’s cash requirement and the above-mentioned credit requisites.

Presence of collateral makes the entire loan procedure slow and time-consuming, as the lender first evaluates the offered asset, and then approves and decides the loan terms. However, a cheap unsecured loan is free of such lengthy routines. Its fast approval feature makes it advantageous for people who have small or immediate monetary requirements.

Usually, every borrower keeps track of his repayment schedules. However, in the event of a repeated default - accidental, circumstantial, or intentional - the lender cannot take over any pledged asset. The only way he can extract his money is by approaching the County Court.

As cheap unsecured loans are not the safest deals for the creditors, the amount that they approve are limited - average cash range is £5000 to £25000. Currently, cheap unsecured loans have the second largest market share in the UK loan bazaar. Though they have a widespread appeal, always shop around to get the best possible deal.