An unsecured loan is a loan that is approved by the lender without obtaining any collateral. You don’t have to provide your property papers, car, gold, or any other valuable items as a security to the lender to get approved for your loan.
Why unsecured loans are popular?
One of the major reasons why unsecured loans are popular is they do not require collateral. Therefore, the application process will be quicker as the documentation is very minimal. You will be approved for a paperless loan within a few hours. Moreover, you need not worry if your credit score is low, as some lenders offer unsecured loans even if your credit score is less.
Although you may not lose your assets, in case you don’t repay your loan, the lender may report your payment behaviour to the credit bureaus leading to a significant drop in your credit score. You may not be able to get a loan again in the future. Moreover, some lenders may sue you in court for the amount you owe. So, borrow responsibly and always repay on the specified date mentioned in your loan agreement.
Advantages of applying for an unsecured loan
Some of the key advantages of applying for an unsecured loan include:
- Easy to borrow – You can get approved for an unsecured loan very quickly, probably on the same day you have applied or even quicker because the documentation is minimal.
- No-collateral required – You don’t have to provide your assets as security to get approved for a loan.
- Get cash in 24 hours – Your approved amount will be deposited into your account within 24 hours.
- Limited cash approval – Lenders do not offer more cash since they are at risk in case you default. This can be an advantage because when you look on the brighter side, you will be able to repay your loan quickly.
- Flexible repayments – Not many lenders will provide you a loan with flexible repayments options. Research and find lenders who can offer you a loan with flexible payments.
Where can you use an unsecured loan?
You can use an unsecured loan for your every need. Be it a medical emergency, to go on a vacation, to pay for your child’s education, for your wedding or any other need. Usually, a lender who offers an unsecured loan does not impose any restrictions on how you spend the money. Just make sure that you do good research and find a lender who offers you an unsecured loan online with flexible options to repay. Before applying, it is important to check if the lender is levying any hidden charges or charging a penalty for prepaying your loan.