Unsecured Loans – their negative sides
As in other types of loans, in unsecured personal loans too, there are a few positive as well as negative aspects. These things are certainly to be considered by the borrower. In this loan, there is no need for any collateral and, therefore, the fear of losing the collateral is ruled out! The loan amount could be used in any manner as the borrower likes; there is no restriction! Loan approval process is completed much quicker than in secured loans.
Rates of interest are higher
In respect of unsecured loans, lenders usually charge a somewhat higher rate of interest compared to a secured loan. Besides, lenders fix a limit on the loan amount. When you are need of urgent money, going in for an unsecured loan is the best option available. You are not required to offer any security; so, in case of default, there is no risk of losing the property! And particularly when you do not have any assets to offer as security, getting loans with no credit check is the only option available and viable, to meet your requirements.
If you go in for a secured loan, you will be required to indicate how you are going to utilize the loan amount. There may also be a few clauses which may curtain certain uses with the loan amount. Whereas, in an unsecured loan, you are at full liberty to use the loan amount in any manner you choose! Even if your credit rating is not good, you can still try and build a reasonable credit history, by making prompt repayments in respect of your present loan. If you have good credit, you can negotiate and obtain the best interest rate.
No delay in approval
As far as getting loan approval is concerned, it is done through quick processing and final approval is given without any delay; at best, it is given in just two days. Interest rate very much depends on your credit history. As explained earlier, when it comes to interest rates, it will definitely be high when compared to secured loans. Repayment terms too may not be to your liking. The best plus point is you get the loan amount in quick time and you are not answerable to the lender regarding the use of the loan amount.
If you are thinking in terms of large sums of money, the option of an unsecured loan is no good; it will not meet with your expectations. Normally, lenders are averse to giving large sums of money against an unsecured loan. They have reservations in giving large sums of money because the loan is not covered by any security, and they may not be able to recover the loan amount easily. So, they always want to play it safe. Now, it is up to you to go in all these pluses and minuses that exist in an unsecured loan, make a careful and thorough comparison and decide in the matter i.e. whether to go in for an unsecured loan or not!