With more and more people losing their homes, in case of inability to payback, the
aversion to secured loans has grown and Unsecured Loans are gaining popularity. Their
quick approval, fixed interest rates and needlessness for collateral is what takes them
higher up the ladder in the Loan market. Unneeded collateral attracts non home owners,
tenants, people from low income groups and now, home owners as well. A good credit
score and a promising repayment potential is what gets you the best Unsecured Loan
Are you faced with a trying situation? You know you need the money but dont know
where to go? Every lender seems to be asking for collateral and you have no security to
offer?. Read on, because Unsecured Loans are just what you need!
An Unsecured Loan, just as the name suggests, is secured on nothing at all i.e. the
collateral that is a requisite to attain a Secured Loan is unessential. Unsecured Loans
are granted on the basis of your credit history and the repayment potential you convey
to your creditor. These loans are tougher to obtain because they prove risky for the
creditor, the obvious reason being lack of collateral. Lenders have nothing to bank on
in case a borrower defaults in his repayments. To compensate for this, unsecured loans
come with a higher interest rate and a lower loanable amount. The value of unsecured
loans is limited to $25,000. The typical APR of an unsecured loan ranges from 7% to
30%. Although Unsecured Loans are unpopular compared to Secured Loans, they come with
their own package of benefits.
Benefits of Unsecured Loans:
- Unsecured Loans do not require collateral. So, if you do not have property or a home in your name, this loan is the perfect solution. Thus, Unsecured Loans are ideal for non home owners, renters and tenants as well.
- In case of Unsecured Loans as no collateral is to be placed, it frees up the equity in your home (if you are a home owner) to be used for other purposes.
- Home owners, insecure about placing their home as collateral, prefer unsecured loans.
- Unsecured Loans are quicker to obtain because the time taken for valuation of collateral is eliminated. This is ideal for those who want a loan to be sanctioned faster than normal.
- The interest rate for Unsecured Loans ranges from 7% to 30%. This is fixed and cannot change over the loan term. Paying a fixed amount every month is much easier than when you dont know how much to keep aside for your loan repayment.
- The repayment term for an unsecured loan varies from 6 months to 10 years. Usually, the loan repayment term for an unsecured loan is shorter than that for a secured loan (the shortest term for a secured loan is five years).
- If an unsecured loan lender finds a borrower with good credit history and dependable repayment capacity, he will not hesitate in providing him with a better interest rate.
- Unsecured loans are also made available to people who are on income supports: like those over 60 years of age, people who do not have enough income to meet their basic needs, or people whose savings range from $8000 to $12000.
- Unsecured loans can be used for innumerable reasons like home improvements, debt consolidation, mortgage arrears, a new car or a luxury holiday.
Nowadays, the demand for Unsecured Loans is surpassing that for many others. People
have become more conscientious about putting their home at risk. Although, there is no
worry of losing your home in case of any inability to payback the loan, in the event
that a borrower does not pay up, the lender will invoke the terms of the legally binding credit agreement and pursue the borrower through the legal system. Borrowers
come forward without hesitation to take Unsecured Loans, this is why more and more
creditors are emerging, each with better payment options than the other. Explore your
options and familiarize yourself with the terms of Unsecured Loans before you settle on
any one. Although the benefits are many the decision is ultimately yours!
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