Unsecured loans do
not require or demand any collateral. As the name implies, these are virtually
secured on nothing at all. These loans are sanctioned on the basis of your
credit record and your repayment potential. These loans are not easy to acquire
because of collateral's absence. Lenders have nothing to recuperate in case a
borrower's default in his repayments. To balance this insecurity, these loans
come with higher rate of interest.
The typical APR of these
loans ranges from 7% to 30%. Although unsecured loans are not as trendy as
secured loans, it has several benefits. These
loans do not require any collateral, it is best for non home owners.
Those home owners who feel unsecured in placing their assets as collateral can
avail unsecured loans to fulfill their necessities. These are quicker to obtain
because of no property evaluation, these are best for those who want a loan
urgently.
The interest rate of these
loans is fixed, so it is easy to pay back as you know how much you have to keep
aside to repay the loan. These loans
are short term loans and the repayment period varies from six months to ten
years. If a lender finds a borrower with superior credit score and refund
capacity, lender can offer low rate of interest.
Unsecured loans are offered
even to those peoples who are on income supports or pension holders. Inhabitants
who do not have sufficient income to meet their basic needs and are above 60
years of age can also apply for unsecured loans. These loans can be used for several reasons like for
buying a luxury car, debt consolidation, home improvement or repair etc. So,
use these loans as per your need without even offering any collateral.
