Unsecured Loan - of Many Benefits

By: Eric

Loans are secured and unsecured in character. Secured loans are availed against the presence of collateral. With the unsecured variety, there is no requirement to put up collateral.



Unsecured loans have several advantages. The most common one is that there is no threat of property repossession here. However, this is no license to default. It is just that the loan-taker can pay back the amount with a certain peace of mind that may not be there with secured loans. A repayment default is not that costly. Still, it can badly affect the credit score; in other words, the borrower will be black-listed as a bad credit borrower. This will make it difficult for him to avail loans in future.

Another advantage of unsecured loans is the relative lack of documentation. With no collateral to evaluate, these loans are processed comparatively quickly, thus providing the borrower with the much needed expediency.

There are some minor drawbacks as well. The interest rates with unsecured loan are high. This is mainly due to the perception of the lender towards an unsecured loan. Without the security of collateral, and no other way to recoup the loan amount in case of a default, the rates are predictably hiked. Also, the repayment term is relatively shorter (ten years maximum), and the borrowable amount lower (?25000 as the standard limit).

There are many avenues from where one can get an unsecured loan. Banks, building societies, private lenders and the Internet provide this and all other types of loan. The online facility is the most popular option among the borrowers, for obvious reasons. It offers expediency as well as choice.

Before availing a loan, the borrower should undertake proper research and comparison analysis on the loan products available in the market. That way he will be able to figure out the best loan deal for himself, as well avoid being a victim of hidden charges.

Unsecured Loans
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 

» More on Unsecured Loans