What Are Unsecured Loans

What Are Unsecured Loans

What is An Unsecured Loan ?



It is a loan that is not subjected to any kind of security as collateral, like a car, your house or any valuable property, to secure the loan. So most of lenders consider it to be risky and that’s why it have a higher APR ( Annual Percentage Rate Of Interest ) if compared to secured loans.

Actually, Lending institutions or banks that offer high risk unsecured loans are interested in the borrowers credit score history, in other words, borrowers credit score will judge about his capability of getting such a loan.





How To Get Unsecured Loan ( Requirements ) ?



Anyone could apply for unsecured loans, for example and not limited to. Doctors, employees, students, people in business or self employed persons.



The rule of getting accepted to this loan is to have the following requirements ( qualifications for unsecured loan ) :



1-To be at least 18 years old.

2-To have a fixed income.



Here, it is important to notice about something which is your credit score, as high as your credit score is, as quick as possible you will be accepted to such loans, since bad credit scores always are subjected to some kind of study before they get in.





What Are The Features Of Unsecured Loans ?



Unsecured loans are offered by many banks and lenders. It can be ranged from $20000 to $100000 with a flexible repayment periods ranging from 6 months to 30 years.





What Score Do I Need To Get An Unsecured Loan ?



Referring to our studies, the best score to be accepted in an unsecured loan offer is 650 and more, if you have it you are more likely to be accepted.



In fact, there are no credit score minimums exactly specified by lenders, it is a case of study for each of them, usually credit scores are used to determine the amount of interest that will be offered to the borrower.



Legal Ranges Of Unsecured Loans Interest Rates :



In fact, it depend on the lending institution itself, but referring to too many borrowers that we have recently asked, rates are ranging between 1.5% to 7.5%.

The two major factors that affect interest rates are :



1-Term of Unsecured loan (repayment period and the value of monthly installments).

2-Borrowers Credit Score history.



What If You Defaulted An Unsecured Loan Payment/s ?

There are too many consequences of defaulting and/or showing any shortcomings in your installments, you have to notice that : ( in way or another, the lending institution will get back its total amount of money). On the other hand, the borrower will be the biggest loser, since he/she will be forced to pay a mush higher interest, plus a huge reduction in his/her credit score as a punishment.



As a result, unsecured loans is similar to any other loan since it must be paid within its preconcerted deadline, but it have more features than the other loans since there are no collateral used to secure this loan.



Finally , no one is able to know about the borrowers monetary situation more than the borrower himself, so borrower is the only one that have the right decision about choosing the right loan that fits his/her needs.