Ever seen an advert referring to an unsecured loan and wondered what that means? We'll try to explain the concept for you in straightforward terms:

An unsecured loan is basically a loan that does not involve you providing something to act as security (such as your home). With a secured loan, your security is potentially at risk if you fail to make the loan repayments. With an unsecured loan, you don't have that particular risk. Sounds too good to be true doesn't it?

What you will find with companies and organisations offering unsecured loans is that the rate of interest that you will be asked to pay will be much lower than would be expected with a secured loan. This is because the loan company are taking on more risk. What this means is that it will certainly be worth your while to shop around and compare interest rates before deciding and taking out a loan of this type - there can be surprisingly large variations from one lender to another.