If you’re looking for a way to borrow money, you may be interested in an unsecured personal loan. An unsecured personal loan allows you to borrow funds without having to use an asset for security. It’s the type of loan that gives you more flexibility as to how to use the loan amount, be it to consolidate debt or even make large purchases.
How Does An Unsecured Personal Loan Work?
When you are approved for bad credit unsecured personal loans with very fast approval, you receive a certain amount of funds you can use for worthwhile purposes. You must pay the funds back with interest and fees. Typically, you can use the funds however you like, but you may be asked to list why you want the loan when applying for it. This will form part of the lender’s decision. You may also need to list how much you would like to borrow and a time period when filling out your application.
Usually, unsecured loans offer amounts from anywhere between $1,000 all the way to $50,000 and loan terms vary between a year to seven years. Unsecured loans often come with higher rates, too, compared to secured loans, since the lender is taking a greater risk. The loans may also come with establishment fees, annual fees and monthly fees, so it’s important to check the fees before applying.
What’s more, unsecured loans may be variable or fixed and payment restrictions will differ from one lender to the next.
The Benefits OfAn Unsecured Personal Loan
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There are several benefits to be had from unsecured personal loans, including:
- Options – since this is a standard loan, lenders and banks offer their own version. This means you have a variety of choices so you’re sure to find the right one for you. You can even pick the type of interest rate you prefer, loan terms and other features.
- Flexibility -you’re free to use the loan however you wish, be it to buy furniture or consolidate debt.
- Rates – interest rates are higher with unsecured loans, but you may still find those with low rates.
How To Apply For Your Unsecured Personal Loan
If you are interested in applying for your unsecured personal loan, you should start your search online to compare lenders. Once you’ve browsed through all your different options and found a suitable loan for your needs, you can begin the application process.
To get an unsecured personal loan, you must meet a certain range of criteria as set by the lenders. These usually include:
- You should be 18 years or older
- You should have a good credit rating
- You must provide proof that you can pay off the loan
- You may need to provide copies of certain documents, such as credit contracts, payslips and bank account statements
- You may need to provide 100 points of identification
While an unsecured personal loan tends to come with a higher rate compared to secured personal loans, there are still competitive rates out there. As for paying back the loan, fixed rate varieties offer terms of around one to five years, while variable rate loans can be paid off between one and seven years.