The Basics Of An Unsecured Loan An unsecured loan is

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					The Basics Of An Unsecured Loan
An unsecured loan is a loan where no collateral is put up to secure the loan. Many lenders shy away from unsecured loans because they present a
risk, especially for loans given to people with a less than perfect credit history. However, many lenders do offer unsecured loans. It is a good idea to
learn more about unsecured loans before attempting to get one. Unsecured loans are good for someone without anything to put up for collateral or for
someone with a good credit rating. There are many points to an unsecured loan that a person needs to be aware of before borrowing. An unsecured
loan is a risk for the lender, as mentioned. Due to this risk the interest rates are usually higher than for secured loans. The interest on an unsecured
loan is not tax deductible either. The terms are usually fixed which means there is a set time limit in which a person has to pay back the loan. One of
the most commonly known unsecured loans is a credit card. A credit card is a type of unsecured loan; however it differs greatly from an unsecured
loan given by a lender. Credit cards usually have much higher interest rates and they do not have fixed terms. This is why people tend to get into
financial trouble with credit cards. The way they work is to try to encourage a person to spend more money therefore crediting greater debt and
earning the credit card company more interest money. One of the biggest reasons unsecured loans are so risky for lenders is that they have nothing
put up for the loan. The borrower did not risk losing their home or other assets should they default on the loan. It is much harder for the lender to get
their money should the borrower default. With a secured loan the lender can simply seize the collateral and retain at least part of the money owed to
them. With an unsecured loan the lender has to take legal action which costs them more money in the long run. So it is easy to see why getting an
unsecured loan can be difficult. Unsecured debts can be a risk to both lenders and borrowers if they are not careful. Many lenders require exceptional
credit in order to even qualify for an unsecured loan. Credit card companies are a little more lenient, but still often require a good credit rating. Even
those with good credit, though, can get into trouble with unsecured loans, like credit cards. If a person truly wants to get an unsecured loan their best
option is to get a loan through a lender instead of getting a credit card.


About the Author
James Copper is an experienced Secured Loans Advisor who has been in the industry for over 20 years. He works for Wise Loans who offer Secured
Loans and Second Charge Loans.


Source: http://www.articlesoft.com