Unsecured Loans 101

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If you are looking for a good company where you can submit an application for a personal loan, you may also be considering unsecured loans as well.

 

If you are not sure what an unsecured loan is, however, you still may be wondering if applying for one is a smart idea, or if a secured loan has more advantages.

What are the advantages of an unsecured loan? — If you do not own a home or a car that you can offer as collateral, then an unsecured loan is definitely the best choice for you. If you do not want to lose your home or car if you cannot repay a secured loan, then an unsecured loan is also for you.

The main advantage of an unsecured loan is you do not have to worry about losing a home, a car or other valuable property if you find you cannot afford to repay the loan at a later time.

What are the disadvantages of an unsecured loan? — As you are not putting up property as collateral, the main disadvantage of an unsecured loan is the interest rate will generally be higher.

If you can afford to pay off an unsecured loan much faster than its term time, however, this is not necessarily a disadvantage. If you do not have collateral to offer for a secure loan, then an unsecured loan is your only option.

When should you apply for an unsecured loan? — If you need money to repay a loan with a high interest rate, if you have medical bills, need to buy a car or want to start a small business, applying for an unsecured loan is often your best option.

What to look for when applying for an unsecured loan? — There are several things any company offering unsecured loans  (see finance district) should offer you before you consider applying for one through them.

They should offer an affordable interest rate. Some companies that specialize in unsecured loans may make it easy to get a loan but, if the interest is ridiculously high, you will quickly regret getting a loan through them.

They should offer an easy way to make payments. Whether that is through a bank account, PayPal or mailing in a payment, just make sure the method is convenient for you.

They should also have a good reputation for how they treat their customers. This can be found online by reading just a few reviews written by customers of the unsecured loan company you are considering using.

How long does it take to get an unsecured loan? — Applying offline may take a few days. If you apply online, however, many companies offering unsecured loans are set up to respond quickly.

This will often mean you can apply for your unsecured loan today, and know whether or not it has been granted to you within one to three days. Once you receive the email, and you have been approved, you can then decide to take it or reject it, depending on the terms they offer.