Unsecured personal loans may not sound as appealing as the concept really is in real life. The word “unsecured” itself tends to drive away people, already thinking negatively of the whole concept. This is, however, a big mistake for most part. The party “unsecured” here is not even you, the consumer, but the lending company, trusting you to pay back without asking for a material collateral, security deposit, or down payment. You are even the most benefited party in transactions like this, for loans like these are mostly low-risk; should an incident cause you to be unable to pay back, the credit company cannot take any possession of yours of any worth or even require you to sell any of them.
Types of unsecured personal loans
You might not even realize it, but you pretty much have already made an unsecured personal loan in your life. Since the blurry definition and typical misinterpretation of these types of loans, people hardly distinguish that what they are already doing is a form of an unsecured personal loan.
Friendly and familial lending
Every time you borrow some money from a friend or family member. This falls in the unsecured portion because the only assurance they can get that you will pay back what they lent is your bond as friends or shared DNAs. Although terms for payment are sometimes not really agreed upon, the borrower will still be obligated to do so because of the trust that has been generously graced unto them.
Another popular kind of this loan made through the use of credit cards. As each time a purchase is made through a credit card, the card holder is obliged to sign a form validating the payment which also serves as an agreement to make the payment to the credit company. Here, you get to have the ability to loan because of the certain requirements and terms you have agreed upon with the lender before getting the credit card, although there are no security for the credit company that you will pay for the money you have borrowed.
Credit company loan
An unsecured personal loan could also be obtained through an application of a real loan of the same nature to some loan providers. However, loans like these are harder to get approved for rather than secured loans unless you have a sparkling credit history and borrower income. These companies will assess your creditworthiness before they’ll hand you the money as their assurance that you’ll pay them back.
However, there are also some companies offering unsecured personal loans for those with bad credit, the only difference though, is that they are only allowed to borrow a relatively smaller amount of money than someone with good credit background could apply for.
Short term loans, like cash advance and payday loans, also qualify in this section, being purely based on paper works and certificates of income.
As there are a number of choices available to choose from, it wouldn’t be that hard in obtaining an unsecured personal loan. One thing to remember, though: look around for the best option for you. Always keep in mind that the most suitable for you would be the one which you could manage the terms and pay back almost easily.