Is an unsecured personal loan right for you?
Personal loans come in two flavors: secured or unsecured. The difference between them is simple enough—you’ll put up collateral to secure a secured personal loan but not for an unsecured personal loan. The only question is which works best for you.
An unsecured personal loan presents a higher risk for the lender, so requires a higher credit score and income. That risk level also means that an unsecured personal loan comes with a higher interest rate than a secured loan.
So what are the benefits of an unsecured personal loan? Their broad accessibility, for starters. Millions of people—especially city dwellers—don’t own houses or cars, which are commonly used as collateral. And, if they don’t have financial assets like certificates of deposit or annuities to offer as security, an unsecured personal loan might be the only option.
And, now that home values have tanked, millions of homeowners no longer have enough equity in their houses to use them as collateral for an unsecured personal loan. And, frankly, in the new economy a credit score of 725 isn’t as shiny and promising as it used to be the eyes of many lenders.
There are other benefits to an unsecured personal loan, even for those who can offer acceptable collateral. The asset securing the loan will have to be forfeited if financial calamity strikes the borrower. A period of unemployment, a family member’s medical bills or any number of hardships could mean losing a family home or necessary transportation.
For help finding the best personal loans, contact American Unsecured, one of the nation’s largest loan-consulting firms.
The Skinny on Unsecured Personal Loan and Signature Loans
You need money. If you’ve been looking for an unsecured personal loan, and you have good credit, a job and a reasonable work history, you may have some very attractive options you didn’t know about.
First of all, let’s talk about what a unsecured personal loan is. They are loans based on your ability to repay and history of doing so. Beyond that, they require only your signature and are sometimes called signature loans or personal unsecured loans. They don’t require any collateral to secure the loan in the event that you’re unable to pay it back. Read more