All About Unsecured Loans

By: Bernard John

However, payment cards have two major drawbacks that have remained unnoticed for years - very high interest rates and restricted amount, leading to multiple cards and multiple high interest card debts. Research shows that people are slowly but surely becoming aware of the above-stated limitations of payment cards.

Another reason for the growing popularity of unsecured credit is its 'no collateral' attribute. We all know that in the world of credit, presence of collateral ensures quick attention and maximum loan benefits like high credit range, low APR, flexible repayment methods and negotiable loan clauses. However, pledging collateral is neither always required nor it is possible for all.

Hence, unsecured loans are the best alternative for people who are unwilling to get into property related legalities and risk their property for a small amount (homeowners and property owners), and the only alternative for people who do not own any valuable asset to pledge (tenants and students).
As unsecured credit is obtainable without pledging collateral, any UK resident over 18 years of age - tenants, homeowners, property owners and students as well - can apply for it, subject to the lender's credit policy, and the borrower's credit history, employment status and debt to income ratio (DTI = Debts/Income).

The 'no collateral' attribute of unsecured loans leads to benefits like no time-consuming property evaluation procedure leading to less paperwork and quick loan approval. It also ensures that repeated defaults - accidental, incidental or intentional - or non-payment will not lead to repossession of a valuable asset.
However, like other credit alternatives, unsecured loans too have certain shortcomings like limited credit range (typically between ?500 and 25,000), high interest rates (typically between 7.9% and 41%), fixed rate plan and payback option, and non-negotiable loan terms and conditions.

By: bernard john

Unsecured Loans
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