Explicit Finance
Unsecured loans are loans where borrowers do not have to provide any collateral. That is, they do not have to put up any valuable asset, such as a home or a car, that the lender can take possession of if they fail to make repayments. Lenders usually provide unsecured loans only when they are convinced that the credit rating and financial position of the borrower are such that there is little risk of default on repayment. In other words, successful applicants will normally not have any defaults or bankruptcies on their credit record and must be able to show they can pay back loans without causing themselves financial hardship. However, there are now lenders who cater to those with a bad credit history.
Money can be borrowed for just about any legal purpose, be it to buy a car or electrical equipment or furniture, to carry out home renovations, to pay for a holiday or wedding or tuition fees, or to consolidate debt. Unsecured personal loans are offered in the range of $5000 minimum up to $75,000 maximum and over terms of 1-7 years, while unsecured direct loans and payday advances can be had for small amounts in the order of $100 to $500 and are to be repaid within weeks.
There was a time when you had to make appointments with bank managers and visit the bank two or three times to get unsecured loans. Now it is possible to apply directly online (which will typically take about ten minutes) and instantly be given pre-approval. Depending on the applicant’s ability to provide required documentation (usually only the last two pay slips) and sign the final documents, the process can take as little as 24-48 hours.
Because they are unsecured and therefore riskier for the lender, unsecured loans carry higher interest rates than do secured products. There are also usually penalties attached if you pay your debt off before term.
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