Unsecured Personal Loans
Would you like going on a holiday through the sale proceeds or your home? Or, how about repairs in a
home that has been effected at the cost of home itself? Ones home is too prized an asset to be frittered
away thus. Loans against home, may if not paid on time, result into repossession of the home or any
other asset serving as collateral. The fear of losing assets, particularly home, has forced many people to
opt for unsecured personal loans.
Unsecured personal loans do not guarantee use of home for recovery of unpaid loan proceeds.
However, the swiftness with which a secured loan provider liquidates collateral is not possible in
unsecured personal loans. The provider of unsecured personal loans will have to move the courts for
recovery. This will often be a protracted process, but the defaulter borrower will have to cough up the
However, a majority of borrowers take loans to successfully repay them after a certain time with
interest. Therefore, their interest in opting for unsecured personal loans is only to save their homes
from the loan sharks and the hard moneylenders.
The best feature of unsecured personal loans is the relative speed with which they are available for use.
Since one of the most important tasks of valuation of asset has been made unnecessary, savings in time
is obvious. Therefore, while a person has to wait for at least two weeks to get hold of loan proceeds,
unsecured personal loan proceeds will be released much faster, sometimes within 5 days of application.
Hence, unsecured personal loans find good use in situations that demand hasty supply of cash.
Borrowers with bad credit history will sense some limitations when using unsecured personal loans.
Loan providers need to have something to fall back upon in case of defaults in loan. If it is not the
collateral, it must be the personal credibility of borrower that must lead to trust. Therefore, it is
preferred of borrowers to have good credit.
A person is said to have good credit history when he has paid all his dues on different debts on time.
Credit reference agencies, namely, Experian and Equifax prepare the credit file of borrower. A borrower
in need of a fast approval of unsecured personal loan must append a copy of his credit report, requested
from both these agencies.
Bad credit borrowers may find getting good deals in unsecured personal loans difficult thence.
Borrowers with bad credit surely can find deals appropriate to their condition if they associate with
brokers. Brokers are helpful since they are associated with several banks and financial institutions. Such
lending agencies provide unsecured personal loans to the applicants when a reputable broker forwards
The principal drawback of unsecured personal loans is the high rate of interest charged from borrowers.
There is little borrowers can do about this. The borrower gets freedom from clause of collateral; in
exchange, he needs to pay a high rate of interest to compensate lender for high risk. The interest rates
on unsecured personal loans go as high as 7 to 30%. The interest rate or APR is fixed based on applicants
Apart from credit history, there are several factors, which are taken into consideration while preparing
credit score. The APR determined on this basis will be offered to borrower. Because of the prevalence of
a large number of loan providers, borrowers can exercise their power of choice. The lender whose
product is constituted of the best features is the one that is chosen by the borrower.
If negotiated well, the borrower will be able to design the unsecured personal loan as fully befitting his
situation. There are several decisions to be made on unsecured personal loans, such as repayment,
lender, term of repayment, rate of interest etc. The key to a best deal unsecured personal loan is to be
alert while making such decisions.