Beat My Debt is not a loan broker and cannot provide either unsecured or secured loans. To apply for a loan you will have to approach a bank or other licensed loan provider.


THE COST OF UNSECURED LOANS

Normally there are no set up fees when you take out an unsecured loan from a bank or building society. The real cost of the loan is the interest that the loan provider will charge. It can often be quite confusing to understand loan interest rates. Therefore the key to understanding the cost is simply to work out how much you will have to repay over the duration of the loan.

Where to start

• Choose the solution – Use the “Which way should I turn” form to get your FREE DEBT REPORT
• Ask the experts – use our Debt Forum
• Call us now – speak to one of our advisors in confidence to see if consolidation is right for you.

Take the first step to beating your debt NOW – Call us on 0800 077 6180

How much interest will I pay on my unsecured loan?

Working out how much interest you will repay on an unsecured loan is very simple, you just need to know how much you will be repaying each month and for how long the repayments will last.

For example, if you are borrowing £20,000 and are told you will pay £450 a month for 60 months (5 years), the total repayment will be:

450 x 60 = £27,000

So for borrowing £20,000 over 5 years, you will pay the lender £7000 in interest (or £1400 per year, or £117 per month). 

THE COST OF A MORTGAGE OR SECURED LOAN

Generally there will be a set up fee when taking out either a mortgage or secured loan. However, you will not normally pay these fees directly because they will be added to the loan. It is important that you understand what set up fees the lender is proposing so that you understand how these will be paid.

In the same way as an unsecured loan, the majority of the cost of taking a secured loan will be the interest payments. Remember, many secured loans are paid over 10 years (120 months) and many mortgages over 20-25 years. This means that although interest rates are likely to be lower than those of unsecured loans, the effect of compound interest (interest added to interest) will make the loan relatively expensive over the longer term.   

Secured lenders have come under increased pressure in recent years to be transparent about how much their loans cost. If you are considering taking out a mortgage or secured loan, you should ensure you ask the lender for a written statement of how much you will repay if you continue to pay the loan over the full term.