The whole point of unsecured personal loans is that these do not require collateral from the bank. Because of this you do require a good credit score if you are going to be someone who is going to qualify for this sort of loan and as a result not too many people actually qualify. There are many different reasons why people try go get these sorts of loans. It might be that they are looking to get some money in order to get rid of some of their other debts or that they are looking to start up a new business.
Lets take a look at some of the features of these loans. The first thing to say is that they require a fixed rate and with this the minimum monthly rates will stay the same for the entire time that you have the loan. This is different from adjustable loans where the payment rates that you have to give each month can go up.
Unsecured loans also do not have some sort of prepayment penalty. This means that you are able to make payments towards the loan whenever you want in order to reduce the balance rather than having to pay it month in and month out. Therefore you will be able to pay off the loan much sooner than you might otherwise be able to.
There are different types of unsecured loans that you can get. Most commonly, these are usually offered by banks and credit cards, but cash advance loans are in this category as well. Each of these types of loan can be used to get cash quickly in order to use for a number of purposes.
In order to get approved for one of these loans, however, you are not required to jump through quite so many hoops and you are not required to have the best credit rating that you will for a regular unsecured loan. As a result of this they will require bigger payments to be made each month which some people can have problems with.
The main benefit that you can associate with these loans is the fact that the rates that come with them are lower than those you will get from credit cards. One of the most common reasons why people get these sorts of loans are actually in order to consolidate their debt and get rid of credit cards that are charging them the higher rates.
With these sorts of loans you will be able to know when you are going to come to the end of your payment plan and you may even be able to pay it all off sooner. With credit cards, on the other hand, you will be charged much higher interest rates and will therefore take many years to pay them off on many occasions.
You do have to be careful however, because the rates that are offered with unsecured loans are often higher than those offered with secured loans and this is because of the fact that you are not putting up any protective collateral. |
