Be it home maintenance or covering your student finances, access to quick funds provides can really save the day. One way to secure these funds is through an unsecured personal loan. So, what does an unsecured loan mean? An unsecured personal loan essentially does not require you to put up any collateral to obtain the loan. Unlike other types of loans like a housing loan that are backed by some collateral.
In this article we break down the various aspects of an unsecured loan and ways in which you can get it, and give you various examples of unsecured loans.
An unsecured personal loan is a type of loan that doesn't require collateral, meaning you don't need to pledge assets like a house or car to secure the loan. Instead, lenders approve these loans based on your creditworthiness and ability to repay.
Types of unsecured loans include:
Remember that interest rates on unsecured loans can be higher than secured loans, as lenders take on more risk without collateral.
In unsecured personal loans, the lender does not demand any asset as security against the loan. Instead, the lender evaluates you based on creditworthiness by checking your credit score. Your credit score gives an idea of your capacity to repay the loan amount. It varies based on factors like total debt, repayment history, number of accounts, active income, etc.
Some of the most important benefits of these loans include:
Don't have a great credit score? Here is a quick read on how to get yourself a personal loan with bad credit.
Unsecured loans can help cover expenses for a range of needs that include but aren’t limited to:
So, people prefer these funds to take care of many expenditures. The main reason, however, is that the lenders do not ask for collateral. All you need to do is complete some formalities and sign the documents.
Yes, the interest rates for unsecured loans is much higher. This is to offset the risk that lenders take by giving you such loans, without security.
If you do not have collateral assets like property or other assets, unsecured loans can be a perfect choice. Lenders check your credit score to grant quick funds for various purposes.
On the downside, you need to return the amount at comparatively high-interest rates. Also, the choice of your broker or lender plays a vital role in acquiring these funds.
You can get a personal loan on Fi Money in a matter of minutes; especially if you’re pre-approved. Like any unsecured loan, it requires no collateral. The process is pretty straight and paperless, with the loan amount being deposited into your account in minutes.
Yes, you can apply for an unsecured loan online. Good credit history with systematic planning for loan repayment is enough to qualify for applying for these loans. You can apply for a loan on Fi Money and get it within minutes.
In most cases, you need to pay a small amount of processing fee for an unsecured loan application. These rates vary from lender to lender. Still, the fee can range between 0.5% to 2.5% of the entire amount.
The most common type of unsecured loan is an unsecured personal loan. These can be used for a variety of purposes, such as debt consolidation, home improvement, medical expenses, or other personal needs.
The limit of unsecured loans varies depending on the lender and the borrower's creditworthiness. It also depends on policies, the borrowers income, and repayment ability.
Banks offer unsecured loans primarily to generate revenue through interest charges, diversify their loan portfolio, attract new customers who don't have collateral for secured loans, and meet the needs of existing customers who require additional funds.