Unsecured loan or cash advance is a small loan which you can take any time. It is one of the two most popular options for short-term lending that people can avail of, the other one being payday loans. You don’t need a credit worthiness tag to apply for an unsecured loan. Your bank will advance you the cash or a lending agency will, sometimes on the with a guarantor standing on your behalf in case of default. Such loans are repaid in monthly instalments.They carry very high interest rates, especially payday loans. Unsecured loans are not so bad, with APR less than 50%. The amount lent varies from lender to lender, but doesn’t go more than a few thousand pounds. Unsecured loans are the last to be repaid, only after any other charges on the account are paid. Unsecured loans are not secured by any asset like a home or car. It is based on the assessment of a panel of lenders who will help you to find the best loan for your requirement. Companies offer a range of loans like this, secured or unsecured, depending on your requirement.Different lenders charge different APRs, which they must display on their advertisements as representative APRs, which include all other charges with the interest amount. They charge differently based on customer profiles, their credit rating and the lender’s policy of course. Hence APRs can range from single digits to the 90s.Some FAQs on Unsecured Loans… Can I face legal action if I do not repay a loan?Unsecured loans are perfectly legal and you can face legal action if you don’t repay, even though there are no guarantors or assets linked to your loanWhat are the advantages and disadvantages of unsecured loans?The advantages are that they are easy to get should you need a large amount of cash in a hurry. There are no questions asked and payment terms are flexible from one to five years. There is no pre-payment penalty, and some loans give a repayment holiday period for the first few months after the loan is taken.The main disadvantage is that it is an expensive loan to pay back.Who is the best candidate for an unsecured loan?Though it is not considered a critical factor, a good credit history makes for a good candidate for unsecured loans. If it is a bank providing this loan, an account holder is a good candidate. A longtime resident of the place with a secure job is also a good candidate. So while granting the loans, the lenders consider those candidates as best candidates who can repay their loans in a short period of time because of their secure job and impeccable credit history.Is the interest (APR) flexible? How is it calculated?The interest rate on an unsecured loan is calculated depending on the following factors:1. The amount borrowed – the interest rate is inversely proportional to the amount borrowed usually. If large amount is taken as loan, then the interest rate will be less while the interest rate will be high for a small amount of loan2. The term of the loan – long term loans have higher rates while short term loans which can be repaid within a short period of time has low rates of interest3. The borrower’s credit history – a good credit history will get you lower rates. But if your credit history is not impeccable or you had defaulted in past then you will have to pay high rates of interest.What is the maximum term for such loans?The maximum term of unsecured loans is usually five years.