Unsecured Personal Loan

If you’ve just read the information above about secured loans, then it’ll be pretty obvious that you can have an unsecured personal loan without risking losing your home or other property/items that you own. An unsecured personal loan does present a greater risk to the lender, as if you default on the loan repayment it would be more difficult for the lender to reclaim the money owed. However, on the basis that unsecured personal loans are for smaller amounts of money and are repaid relatively quickly, most personal loan providers accept those risks. Unsecured personal loans can be taken out for amounts ranging from $500 to possibly as high as $50,000 with typical repayment periods between 6 months and 10 years.

Unsecured loans are used when a borrower does not wish to offer collateral. This transaction is more risky for the lender because in the event of a default, they have no recourse for obtaining property from the borrower to settle the remaining debt. Your credit history will matter more when you apply for an unsecured loan, and you will be subject to higher interest rates in the absence of collateral. However, unlike secured debt, you are allowed more freedom in your use of the funds.

Unsecured loans protect you from losing your property if you are unable to repay the debt, yet they do come with higher interest rates and smaller sums.

Typical unsecured personal loans.

It wouldn’t quite be correct to say that apart form the things listed above in secured personal loans, that for everything else you might want to borrow money for could be done as an unsecured personal loan. However, the reality is that it probably could. You may well think – but what about a new auto loan costing tens of thousands of dollars? Well, that is a bit of a grey area and can depend on the car you’re buying. However, in most instances a personal loan for a new auto, which is priced up to say $30,000, doesn’t have to be a secured one. So, unsecured personal loans can come in just about all shapes and pretty well any size. You might just need to borrow $500 to buy a new freezer or TV, or a couple of thousand dollars for a vacation, or perhaps $10,000 to add a sunroom to your home etc.