Do you require money for your home renovation for some upcoming family event? Do you want to buy a recently launched cellphone? Did you see a beautiful gold neckpiece at a store and can’t keep your mind off it? There could be a number of PERSONAL reasons you might need extra money for.
One of the excellent ways to raise money to fulfill your short-term goals is to take an unsecured personal loan. Most of the banks today promise to provide unsecured personal loans within a day or two of completing all formalities, so that you don’t have to wait to settle your urgent expenses.
Unsecured Personal Loan
An unsecured personal loan is the one which is NOT secured by any collateral, for instance a house or a car; as opposed to a secured loan that is only granted at the covenant of collateral. An unsecured loan is granted on the basis of the debtor’s potential to pay back the loan. If you don’t have any valuable asset or property that can be kept as a security but you do have a good credit history, then unsecured personal loan can be a good option for you.
Is good Credit Rating a must?
In most cases, YES! Most of the banks will not provide you an unsecured loan if you don’t have a good credit rating. But a few banks and lenders now provide unsecured personal loans to those who have a low credit rating, making it possible for them to realize their short-term goals.
But there is a catch here! You may come across many lenders who will be ready to give you unsecured loans without checking your credibility. But the rate of interest they charge might be too high and you might not be able to repay the loan at all. So, BEWARE of such no-credit rating-check loans.
Types of Unsecured Personal Loans
There are various types of unsecured personal loans and you can pick the one that suits your requirements the best.
Also known as educational loans, student loans are often the best choice for students as there are a number of benefits. The benefits usually range from interest subsidies, grace period, flexible repayments and many more. In the case of student loan, the credit rating usually doesn’t matter. But you need to a student for sure!
Signature loans are giving on the basis of a mere SIGNATURE- an assurance to pay! Signature loans are a good option if your credit rating is good. Also, these loans help you improve your credit rating.
Credit cards are also a type of unsecured loans. It is another way of borrowing. Credit cards make borrowing easier as you can buy anything, anytime, anywhere! One of the drawbacks of credit cards is that the rate of interest is comparatively higher and the borrowed amount has to be paid back quickly.
Instead of borrowing from a bank, in case of peer-to-peer loans, you borrow from individuals. There might be a number of individuals online, who would want to lend you money on the basis of your credit rating.
Benefits of Unsecured Personal Loans
Some of the benefits of unsecured loans are listed below.
- You don’t have to have sometime to pledge! The number of people applying for an unsecured personal loan is more than those applying for a secured one. This is because the percentage of people with no valuable asset or property to covenant is more than the people with assets to pledge. Hence, unsecured loans become the first choice for these people.
- Unsecured personal loans can be used for various purposes, such as for buying a gadget, renovating your house, buying a two-wheeler and so on. You can certainly fulfill your short-term goals by getting such loans.
- These loans help the debtor to build/rebuild their credit rating, by making on-time payments.
- Another important benefit of unsecured personal loans is the requirement of minimum documentation and flexibility. There is no need to present all the personal documents before the lender.
Unsecured personal loans can be an excellent option to make your not-so-big dreams come true. But always remember to carefully go through the terms and fees of the loan provider before you seal the deal. Choose wisely.
Recommended Read :
- What is a Personal Loan?
- How to Get Personal Loan?
- Personal Loan for Women Employees
- Beware of Personal Loan Frauds
- Gold Loan vs Personal Loan
- Personal Loans Vs Mortgage Loans
- How to Get Loan Against Insurance?
- How to Get Unsecured Personal Loans?
- Secured Loan vs Unsecured Loan
- Pros and Cons of Financing Business With Personal Loan
- Risks and Benefits of Combining Personal Loans
- Pros and Cons of Prepayment and Part Payment of Personal Loan
- Loan Against Car
- Who are Private Lenders?
- Processing Fee for Loans