When an Unsecured Personal Loan is an Answer to Your Problems
As the name would suggest, an unsecured loan is a type of personal loan that doesn’t need you to place any valuable as collateral against the loan. Basically, a personal loan is defined as a loan that helps you meet your individual personal needs, and they can be secured or unsecured. But why should you go for an unsecured loan if there is a secured loan in the market? The reason is very simple, with a secured loan, it will mean putting something of value in line, (in most cases lenders require you to put your house as security).
You can even put your car or whatever other valuable you could be having, as long as its market value at the time of applying for the loan is equivalent to the amount of money borrowed. The problem however comes in when you fail to pay back the loan on time i.e. delay with your monthly payments and stuff. You will be served with late fees which if you continue getting late with the monthly payments and eventually be unable to pay back the loan, the valuable placed as security will be seized by your lender. In other words, with a secured personal loan, you will be putting your property at a great risk.
Unsecured personal loans on the other hand are much safer when compared to their secured counterparts as you will not put anything in line. You can decide to take an unsecured personal loan because of several reasons, which include:-
- To consolidate your debt – perhaps you have several existing loans or bills that are proving to be unmanageable because of their different due dates and varying rates of interest and stuff. You can decide to take an unsecured personal loan so you can consolidate all of them under a single umbrella, hence make the debts easy to manage as you will only be accountable to a single creditor.
- Home improvement – You can also take an unsecured loan to renovate your home with a target to add value to it.
- Finance car purchase – people also take unsecured personal loans to buy their dream cars.
- Manage your credit – if you have a bad credit card debt that is growing by the minute, you can also take an unsecured personal loan to pay off the credit card debt.
The best thing about unsecured personal loans is that they are approved very quickly hence will therefore become accessible very quickly. This is because the approval process doesn’t take long as the process does not involve property value evaluation and stuff. One thing though that you should know is that because the loan is unsecured, it will attract a significantly high interest rate, to make up for the lack of collateral.