However just because a loan is not secured doesn't mean you aren't risking anything by taking one out. If you default on credit repayments of any kind, financial companies can take you to court to recover their money; in the worst case scenario this can lead to possessions, or even your home if the loan is big enough, being repossessed or sold to repay the debt. The best way to avoid this is by being sensible about whether you can afford repayments and keeping in contact with loan companies should problems arise; many companies would rather resolve disputes without resorting to legal action.

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Another thing to bear in mind is that in order to take advantage of the best deals available on unsecured personal loans you need to borrow over a certain amount. This varies between loan providers but if you only wish to borrow a small amount a credit card or overdraft may be a more economical method of finance.