An unsecured loan is a credit product that doesn’t require you to use something as collateral. For example, if you default on a mortgage, the bank can repossess your house to repatriate some of the funds they’ve lost.
In the case of unsecured loans, if you default, you harm your reputation and your credit score rather than lose whatever security you used, as you would with a secured loan.
As with every loan, an unsecured loan has it’s pros and cons. Here’s some points to consider to help you make a better choice about whether an unsecured loan may be right for you.
- You don’t risk losing your property – No need to put any personal property as collateral, thus no risk of losing it.
- Easy Application process – Getting a personal loan through a bank can be complicated. Fortunately the process is easier with unsecured loans. They are provided by numerous alternative lenders.
- If you think an unsecured loan may suit you or your business – apply with us here.
- Smaller loan amounts – Unsecured loans are good for borrowers but risky for lenders. Therefore lenders provide smaller loan amounts, as without security, the risk of not recouping their money is greater.
- Higher interest rates – Lenders normally charge quite high interest rates to justify the risk they’re taking in providing unsecured finance.
- If an unsecured loan isn’t quite what you’re looking for, view the full range of business loan options.
- There are obvious advantages to unsecured loans. No risk of personal assets and generally quick and hassle free to acquire.
- However, consumers considering unsecured loans have to keep in mind the higher interest rates and loan payments.
Taking out a loan can be a daunting process. At FundingPro, we can help you define and understand your goals and be sure you’re finding finance that’s the right fit.