How to Get Unsecured Personal Loans

Having studied the advantages and disadvantages of an unsecured personal loan with no collateral or co-signer, you can understand how it differs from a secured one and what is the best choice for you.

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How to Get Unsecured Personal Loans

Author: 
Emma Jackson
Unsecured Personal Loans

If you need financing to cope with your personal needs, you are probably considering various lending options. As you know, all loans are secured and unsecured, and it is important to understand the difference before applying for and receiving funding. Unsecured loans help people get financing without having to provide assets as collateral, such as a car or house. Oftentimes, an unsecured loan has higher interest rates than a secured one. If you are considering whether you should apply for a personal unsecured loan, then you need to study what it is, why you should choose an unsecured loan, what are the advantages and disadvantages, and whether you can get a loan with bad credit.

Can you get an unsecured personal loan with bad credit?

As mentioned earlier, the lack of collateral complicates the situation. Lenders prefer borrowers with a good credit history as this increases the chances that they will pay off the debt on time. Borrowers with bad credit are less reliable and miss payments more often, but it doesn’t mean that you will not be able to get a loan.

Of course, if you want to get a personal unsecured loan with bad credit, you must understand that you will get less favorable interest rates and loan conditions.

Also, before signing the contract, compare the offers of different lenders. This way you can find the best deal for your personal unsecured loan.

What can I use my unsecured personal loan for?

The loan has this name because you can spend it on almost any personal purpose, such as debt consolidation (which has a higher interest rate than your personal loan), any expensive purchase, car repairs, business financing, home improvements, and so on.

Thus, a personal loan will go to help you cope with any difficulties in life or the purchase of an expensive item that you need.

What is an Unsecured Personal Loan?

An unsecured loan is a type of loan that gives you the ability to get money without collateral. In order to provide you with an unsecured personal loan, the lender will check your creditworthiness to ensure that you can repay the loan. Since unsecured personal loans do not require collateral, the lender does not receive additional guarantee that the debt will be paid on time, thus these loans often have higher interest rates.

Note! Many people think that an unsecured loan is safer than a secured one, as you do not risk your property if you miss a payment. However, remember that if you do not make unsecured loan payments, then your creditor has the right to collect the debt from you in other legal ways.

What are the advantages and disadvantages of a personal unsecured loan?

Of course, before applying for a particular loan, it is important to study its advantages and disadvantages. Thus, you will be able to understand if this loan offer is right for you or if other options are worth considering.

Benefits of an unsecured personal loan:

  • The ability to receive money without collateral. This will be a great benefit for those people who are not home or car owners.
  • Flexible lending terms. As already mentioned, with an unsecured personal loan you will often be able to choose the repayment terms yourself.
  • Competitive interest rates. If you have a good credit history, then you can get relatively low loan rates. However, if you have bad credit, the conditions will be worse.
  • Fast approval. Typically, lenders approve unsecured personal loan applications the same day you submitted it.

Disadvantages of an unsecured personal loan:

  • Less favorable lending terms. Since the loan does not require collateral, it is more risky for a lender who is not sure if you will be able to repay the loan on time. Thus, these loans often have less favorable lending terms and higher interest rates than secured ones.
  • Early repayment fee. Many people choose to pay off the loan in advance to avoid additional interest. However, many personal lenders charge an early repayment fee. Therefore, you need to find a lender who does not charge this commission or consider another loan option.
  • It is not always easy to obtain. If you are applying for an unsecured personal loan with bad credit, it will be difficult for you to get approval. As a rule, lenders want you to have a good or excellent credit score before obtaining such a loan, so bad credit can be a problem.

Should I choose an unsecured personal loan?

Of course, the loan type you need to take depends only on your desires and needs. An unsecured personal loan can be a good option if you need money and do not have a home or car to provide as collateral.

However, please note that the amount of the secured and unsecured loan is different. While applying for a secured loan you can get up to $ 100,000, an unsecured loan is more risky for the lender and usually you will not receive more than $ 50,000.

If you want to get an unsecured personal loan then most lenders offer you fixed monthly payments, which is undoubtedly convenient since you do not need to think about how much to pay in any given month. Also, you can often choose the repayment terms.

Thus, often a personal unsecured loan can be a good option for most people, however it is worth paying attention to interest rates and lending conditions.

How long can I borrow for?

The loan term often varies depending on the amount you want to receive. You can usually get an unsecured personal loan for a period of 1 to 10 years. However, please note that the longer the loan repayment period, the lower your monthly payment will be (however, you will pay more interest in total). Thus, choose the minimum repayment period in order to repay the loan as quickly as possible and not overpay a large amount as interest.

Also assess your strengths sensibly. Study how much of the debt you can cover per month and be sure you will always have the required amount to make a payment.

 

 

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APR Disclosure. Some states have laws limiting the Annual Percentage Rate (APR) that a lender can charge you. APRs for cash advance loans range from 200% and 1386%, APRs for installment loans range from 6.63% to 225%, and APRs for personal loans range from 4.99% to 450% and vary by lender. Loans from a state that has no limiting laws or loans from a bank not governed by state laws may have an even higher APR. The APR is the rate at which your loan accrues interest and is based upon the amount, cost and term of your loan, repayment amounts and timing of payments. Lenders are legally required to show you the APR and other terms of your loan before you execute a loan agreement. APR rates are subject to change.

Here's a quick example:

You borrow $1,000 with an APR of 3% over 3 years (assuming an annual APR calculation).
Year 1 interest: 1,000 x 0.03 = 30 and 30 + 1,000 = 1,030
Year 2 interest: 1,030 x 0.03 = 30.9 and 30.9 + 1,030 = 1061
Year 3 interest: 1,061 x 0.03 = 31.83 and 31.83 + 1,061 = 1,092.83 In total, you'll pay back $1,092.83 at the end of the finance period.

For peace of mind, and to ensure you know what you're going to pay, ask your lender exactly what fees are included in the APR figure they offer you.

Material Disclosure. The operator of this website is not a lender, loan broker or agent for any lender or loan broker. We are an advertising referral service to qualified participating lenders that may be able to provide amounts between $100 and $1,000 for cash advance loans, up to $5,000 for installment loans, and up to $35,000 for personal loans. Not all lenders can provide these amounts and there is no guarantee that you will be accepted by an independent, participating lender. This service does not constitute an offer or solicitation for loan products which are prohibited by any state law. This is not a solicitation for a particular loan and is not an offer to lend. We do not endorse or charge you for any service or product. Any compensation received is paid by participating lenders and only for advertising services provided. This service and offer are void where prohibited. We do not control and are not responsible for the actions of any lender. We do not have access to the full terms of your loan, including APR. For details, questions or concerns regarding your loan please contact your lender directly. Only your lender can provide you with information about your specific loan terms, their current rates and charges, renewal, payments and the implications for non-payment or skipped payments. The registration information submitted by you on this website will be shared with one or more participating lenders. You are under no obligation to use our service to initiate contact with a lender, register for credit or any loan product, or accept a loan from a participating lender. Cash transfer times and repayment terms vary between lenders. Repayment terms may be regulated by state and local laws. Some faxing may be required. Be sure to review our FAQs for additional information on issues such as credit and late payment implications. These disclosures are provided to you for information purposes only and should not be considered legal advice. Use of this service is subject to this site’s Terms of Use and Privacy Policy.

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Credit Implications. The operator of this website does not make any credit decisions. Independent, participating lenders that you might be connected with may perform credit checks with credit reporting bureaus or obtain consumer reports, typically through alternative providers to determine credit worthiness, credit standing and/or credit capacity. By submitting your information, you agree to allow participating lenders to verify your information and check your credit. Loans provided by independent, participating lenders in our network are designed to provide cash to you to be repaid within a short amount of time. The short-term loans are not a solution for long-term debt and credit difficulties. Only borrow an amount that can be repaid on the date of your next pay period. Consider seeking professional advice regarding your financial needs, risks and alternatives to short-term loans. Late Payments of loans may result in additional fees or collection activities, or both. Each lender has their own terms and conditions, please review their policies for further information. Nonpayment of credit could result in collection activities. Each lender has their own terms and conditions, please review their policies for further information. Every lender has its own renewal policy, which may differ from lender to lender. Please review your lender’s renewal policy.

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