Unsecured Loans: Loans Without Risk

By: Eric

An unsecured loan is a loan which a lender gives to you without asking for a security. This means that you need not pledge any property as security or collateral. Sounds good? However, getting unsecured loans is not everybody's wont. There are a certain grounds you should stand good on to avail to unsecured loans. The primary criterion is an unblemished credit score. The rates of interest charged is based on mutual agreement between the lender and the borrower.

Unsecured loans can be used for any purpose, from urgent ones like paying tuition fees to going for a holiday or any other purpose. An unsecured loan comes as a big relief when you feel the need to consolidate multiple debts.



Unsecured loans on the other hand, come with some fine prints. First of all, the rate of interest or the APR (Annual Percentage Rate) can be quite high. For those with not a very decent credit report, it can be as high as 40%. Also, the terms of repayment may or may not be as flexible as in the case of secured loans, and much of it depending much on how convincing your credit record is.

The other few criteria to be eligible to apply for an unsecured loan:



  • You should be a legal UK resident.

  • You should be above 18 years of age

  • You should have a proof of income and employment history


Unsecured loans are available as different schemes in the market:


  • Credit Card Debt: When you use your credit card to make purchases, an interest is charged on it. Using your credit card creates a debt. This can treated as a form of an unsecured loan.

  • Bank Overdrafts: When you take out more amount from your account than available, a debt is created against your name. It means that the account provider is offering you credit. This is noted in a bank overdraft. This is a form if unsecured lending.

  • Corporate Bonds: This bond issued by corporations entitles you to receive payoffs from them. And since, the yield is often high, in spite of certain risks, this form of unsecured loan can be a good deal.


Unsecured loans can be availed from different sources, like building societies, private lenders and the Internet. Of them all, for sheer convenience and choice, the online option is the best for unsecured loans.

Unsecured Loans
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