Unsecured personal loans generally have higher interest rates than secured personal loans. So why, then, do people choose them? One reason is that they may be unable to provide adequate security – perhaps because they don't own any valuable assets or because those assets have been used to support other loans.

Other borrowers, though, are able to provide adequate security for a personal loan, but are just unwilling. One reason might be that they don't want to risk their assets, and another might be that they want to use those assets to support other loans.

Before pursuing an unsecured personal loan, it could be worth doing an online credit check to make sure your credit history would qualify you for a loan. Lenders are usually willing to consider unsecured loans, but are likely to ask for evidence that you will be able to repay the money loaned in the term agreed between you. It's also important to remember that borrowers with stronger credit scores will typically have access to lower interest rates than borrowers with bad credit.

It's important to weigh up both the benefits and disadvantages of an unsecured personal loan before deciding if it's the right fit for your financial situation. You can make a start by considering the following:

When it comes to comparing personal loans, looking for a low rate might be a fair place to start. But, there are a number of other important features to factor into your comparison, including the following:

It's easy to be confused when you see an unsecured personal loan with two different interest rates – the advertised rate and the comparison rate. The main difference between the two is that the comparison rate is usually higher than the advertised rate (It can be the same, but will never be lower).

The advertised rate is how much interest you'll be charged – but this figure isn't an accurate representation of the total cost of the loan, because it doesn't include fees. The comparison rate, on the other hand, includes both the advertised interest rate and the standard fees payable.

Fees differ from lender to lender, so you might be charged none, some, or all of these fees if you take out an unsecured personal loan:

• Upfront application fee
• Establishment fee
• Monthly fee
• Late payment fee
• Extra repayment fee
• Redraw fee
• Early repayment fee

There are two main costs for an unsecured personal loan – fees and interest. Both the fees and interest charges, as discussed above, vary from loan to loan. In order to get an idea of how different interest rates affect loans, you might like to consider using RateCity's personal loan calculator. It can give you an estimate of your personal loan repayments and total interest charges payable over the life of the loan, based on your preferred loan amount, interest rate and loan term.

Unsecured personal loans are offered by several dozen different lenders. That includes the big four banks – ANZ, Commonwealth Bank, NAB and Westpac. It also includes leading non-major banks like Citibank, HSBC, Bankwest, St George, Bank of Queensland, Suncorp, MyState, Bank of Melbourne, BankSA, Heritage Bank, Greater Bank, Hume Bank and IMB Bank.

But the market for unsecured personal loans doesn't end there. It also includes non-bank lenders like Pepper Money, Liberty, Now Finance and Latitude Financial Services. Unsecured personal loans are also offered by peer-to-peer lenders like SocietyOne, RateSetter, Harmoney and Moneyplace.

Once you have a clear picture of your loan purpose and borrow amount, applying for a personal loan can be simple. Consider the following steps:

1. Search and compare personal loans. If you're looking for unsecured loans specifically, you can use RateCity's comparison table to filter down your search results.
2. Check your credit score to get an idea of whether you may be approved for the most competitive interest rates.
3. Use a personal loan repayment calculator to see how different interest rates and loan terms will affect your repayments, and work out what best fits your budget.
4. When you've selected the best loan for your needs, check the lending criteria for eligibility and apply online or at a branch.
5. If you're approved, the total amount will be moved into your loan bank account ready for use.

And if you're looking for a little extra guidance, you can also reach out to a personal loan finance broker to help you with the personal loan application process.

Most lenders require borrowers to meet the following basic eligibility criteria:

• Be 18 years of age or over
• Be an Australian citizen or permanent resident
• Have proof of permanent, regular employment (most lenders will generally also specify a minimum income requirement)

In addition to this, it can also help to have an excellent credit score, a history of good credit behaviour and comprehensive documentation that meets all requirements. Submitting an accurate and complete loan application can help avoid delays with processing.

In addition to personal loans, there are other options when it comes to unsecured personal finance products. The most commonly used unsecured finance products are:

• personal loans;
• credit cards, and;
• overdrafts.

It's worth considering each of these products when deciding what's right for you. The best choice would be dependent on your requirements, including the borrowing purpose, borrow amount and how long you will need to pay it off.