4 Benefits of Unsecured Loans
Find out the beneficial aspects of these types of loans.
13:05 13 April 2013
Unsecured loans are often times frowned upon. Places offering unsecured loans still have the notorious, if undeserved, reputation of obtaining their money in unpleasant ways.
Most of these institutions now have legal recourse to obtain their money and have no need of going to the trouble of breaking kneecaps. That being said, there are a few points that should be highlighted if you are considering unsecured loans.
Here are some benefits of unsecured loans:
- You do not need to own anything which gives you equity. This means you’re eligible even if you do not own a home, vehicle, boat or other means that may be put at risk if you decide on other types of loans.
- Easy to receive. You’ll get a response about approval from minutes to a few days, but it will not be a long drawn-out affair just to find out if you have been approved.
- No credit checks. Most of the time unsecured loans don’t require a credit check which means it won’t lower your score as long as you make the agreed payments.
- Payment schedules are a little different sometimes. Some places allow you a little bit of payment flexibility, but if anything happens outside the norm be sure to contact them immediately to see what your options are. Typically you make weekly or bi-weekly payments which results in a little bit more manageable payment size.
Some of the drawbacks of unsecured loans are listed below:
- Exorbitant interest rates. While many of the places offering unsecured loans will give you a high annual percentage rate, this is the only way they are able to offset the losses they incur from the lack of collateral. There is literally nothing for them to recoup if a person defaults on their loans.
- Stricter guidelines are in place for unsecured loans, again, due to the nature of how they run their business. You have a few sacrifices to make if you need money quickly, don’t want to have your credit checked, and don’t have collateral.