What Is An Unsecured Personal Loan?
Sometimes, you need money for specific reasons that don’t always qualify for receiving a loan from popular financial institutions. The good news is that there’s an option for those who are seeking a personal loan who don’t wish to give up any collateral. This option would be unsecured personal loans. Unsecured personal loans are a great way for consumers to receive quick money to cover some unexpected debts that may arise.
Normally, when you take out a personal loan, the product you purchase with the money you received is owned by the lender, and they have the ability to take it away from you any time you begin to miss payments. The attractive thing about unsecured personal loans is that lenders aren’t concerned with where the funds are being spent, so long as the funds are not being used to start a business.
Regardless, this doesn’t mean that they can’t recover their losses by sending your account with them to a collection agency. There are pros and cons to unsecured personal loans, but for some people, they may be the best option.
How To Qualify For An Unsecured Personal Loan
The biggest part about qualifying to receive an unsecured personal loan, or any loan for that matter, is that the lender is confident you will pay the money back. This potential risk can be examined be the lender in a number of ways, and these include;
- Credit Score: Having a credit score of 680-690 and above will typically land you an unsecured personal loan. If you have excellent credit, perhaps above 720, then you can qualify for some of the lowest interest rates offered by lenders.
- Debt vs. Income: Lenders will take a look at your monthly income, and compare it to how much debt you are in / are paying off every month. If you have too much debt, lenders may see this as an indication that you can’t handle another loan.
- Find A Co-Signer: Even if you have bad credit, a co-signer can still help you qualify for some of the lowest interest rates. The co-signer, obviously, must have very good credit in order to be considered.
Where To Get An Unsecured Personal Loan From
There are various places where you can attempt to receive an unsecured personal loan from. These include, but are not limited to;
- Credit Unions: If you have been a member of a credit union for a while, such as the Federal credit union, you can normally get an unsecured personal loan from them at a competitive rate.
- Online Services / Peer-To-Peer Lenders: Receiving unsecured personal loans with low interest rates can be done by searching online and comparing the interest rates of various lenders. Some offer lower interest rates than others, but others may implement a higher-than-average minimum on the amount you can take out.
- Traditional Banks: When it comes to getting things done in person, there’s no better place to refer to than talking with someone at a traditional bank, especially if you have a question or problem. Regardless, every major bank has online features that allow customers to apply for unsecured personal loans.
Conclusion
Unsecured personal loans are a great option for those who have come across some unexpected debt, or perhaps those who simply don’t want to give the item up the item they’re purchasing as collateral. Before taking out a loan, always be sure to look for the lowest interest rates available, and only work with trusted companies!
