You’ve recently been hearing about this thing called “Unsecured Loan” and it seems to be such a great thing! Come on, no need for collaterals? Sign me right up!
But of course, like any other loans (or basically any life decisions to make), it’s imperative to always check all the facts and know the common ground rules before taking the jump. To help you out, we’re covering the basics that you need to know:
- What exactly is an “Unsecured Loan?”
In a nutshell, an unsecured loan is a type of lending that doesn’t require you to present any collateral such as cars, houses, and even lands. Unlike secured loans, your valuable properties are not at risk even if you fail to pay back your dues.
- So, the big question is: what’s with its interest rate?
Considering that your lender does not have anything to hold on to in case you fail to pay, the interest rate of unsecured loans has the tendency to be slightly higher especially when it comes to banks.
Of course, this is still on a case to case basis since there are a lot of financial corporations that offer zero-interest rates during specific loaning periods which you can utilize when you are in need of some quick cash. Just make sure to follow the terms and conditions so as to not be surprised with an unexpected interest once you return it!
- When should I apply for this type of loan?
Unsecured loans often fit for those smaller-scale expenses which you can easily pay back. They are perfect for emergency costs that can’t wait until the next payday. Since it can gather quite the interest (again, depending on your lender and your terms with them), the technique is to pay it back as soon as possible.
There really is no specific loan type that fits all types of people and admittedly, unsecured loans are not for everyone. However, if you do consider yourself as someone who can take this on easily, there are lots of options to choose from – like Cashwagon!