Unsecured Personal Loans: For Those Who Have No Collateral To Offer!

We've all heard of the importance of collateral when it comes to taking a loan. It is this collateral that puts the hesitance of taking loans in us. Additionally for those of us who have no collateral to offer, does it mean we have no option in case we meet a financial crisis? Hold on—this time the answer's NO! There are Unsecured Personal Loans to help us!

Unsecured Personal Loans are a tenant's best friend. Not only tenants; in fact, anyone in need of financial assistance, with no collateral to offer tends to befriend Unsecured Personal Loans; for example, students, non homeowners, etc. Being unsecured means not compelled to offer collateral.

Collateral is any asset offered by the borrower to assure a lender of repayment. It usually takes the form of your home, vehicle, jewellery, bank account, etc. Higher the value of your collateral, better and more flexible are the loan terms and conditions offered to you. So what happens now when collateral isn't required? Does it mean no flexible terms and conditions?

“Yes and no!" —Unsecured Personal Loans do not offer the best possible options. These are loans meant solely for individuals who have no collateral to offer. To compensate for the absence of collateral, lenders hike interest rates, minimize loan amounts and shorten repayment terms, tightening the repayment schedule for all borrowers availing them. This is justified because no lender in his right frame of mind would approve a loan when he has no assurance of repayment from the borrower.

This is why Unsecured Personal Loans have more stringent terms and conditions compared to Secured Personal Loans. At the same time, if you scan the market well and search for the right lender, you can most certainly find a loan that offers better options than other unsecured loans.

Unsecured Personal Loans encompass a whole lot of options that you can choose from. Your repayment potential is often determined by your past financial records, i.e. your credit history. You need to have an excellent credit record to obtain the best opportunity. Additionally, to better your position, you must be in full-time employment and you must have few or no outstanding payments. These essentials differ from lender to lender and so you need to offer your lender exactly what he needs.

Unsecured Personal Loans approve loan amounts that extend up to $15,000. Your credit score determines how much actually gets approved. A typical loan term or repayment term for Unsecured Personal Loans extends up to 10 years only. This is a very limited range when compared to the “up to 30 years" for secured loans. A lender wants his money returned as soon as possible. This is typically why he shortens your loan term.The interest rate offered on Unsecured Personal Loans is much higher than that offered on secured loans due to the absence of collateral.

It may seem a little unfair. But if you put yourself in your lender's shoes and have nothing to bank on when your borrower defaults in his payments, then you'll definitely understand the restricted options.

If your do your rounds well enough, choose your Unsecured Personal Loan from the right lender, select a loan tailored to your pocket and stick to your repayment schedule, then Unsecured Personal Loans are simply perfect! They are all you can ever ask for. Ultimately, it's not what the loan offers but what you make of it that really matters...!