6 Benefits of Unsecured Loans
Unsecured loans are a type of loan that doesn't need a guarantee or security. You can use the loan for business or personal needs like home improvements, medical expenses, or even a vacation.
When compared to traditional loans, unsecured loans have many advantages. Here are the main benefits of unsecured loans.
1. No Risk to Personal Property
You don't have to put up your property as collateral when getting an unsecured loan. That way, in the event of an emergency your property is not in jeopardy in the event that your ability to pay is temporarily challenged. This gives you peace of mind in case you lose your job or source of income.
2. Available to Anybody
Unsecured loans have less strict requirements, providing access to people from all walks of life. While lenders do still have a vetting process for new customers, it is much quicker and easier than you would see with a more traditional loan. Regardless, some lenders will conduct vetting before they can provide an unsecured loan. However, if you borrow small amounts for a short period, you will likely qualify.
3. Quick Approval Process
Since the lender does not have to evaluate collateral, you can typically get approved and get your money on the same day you apply. If you apply online, you can get the loan without meeting the lender. The quick approval is because the loan amount is relatively small. It’s common for people to get unsecured loans within the same day that they apply.
4. Flexibility and Versatility
Many loans have specific objectives, such as funding the purchase of a home, vehicle, education, etc. and can only be used for that purpose. This is not the case with an unsecured loan. While the lender might inquire as to why you need the money, there are no restrictions as to how you use the funds once approved.
On the other hand, most unsecured loans are flexible, as you can use the loan for anything. Such loans are perfect for people who want to conduct a major purchase but don't want limitations on how to make the purchase. Nevertheless, always get clarification from the lender about loan usage before you apply.
5. Lower Interest Rates
Unsecured loans may have higher interest rates than traditional loans, but the loans may have lower interest rates than credit cards. For example, while the average interest rate for credit cards was 19.04% in November 2022, the average interest rate for personal loans was 10.28% in the same period.
If you have a good credit history, the lender can decide to offer more favorable terms. In addition, a good credit history allows you to borrow higher amounts than you would on a credit card. Eventually, you will save money on interest while increasing your credit score.
6. Multiple Types to Select From
You have a wide range of options depending on your financial needs. Here are some of the common types of unsecured loans.
- Personal loans. You can get this loan from any financial institution and use it however you want.
- Education loans. The loans are available to students and help to pay for tuition and other education expenses.
- Peer-to-peer lending. The loans are available from financial institutions but are high-risk. These loans can also be gotten at online P2P platforms.
- Cash loans. This is a type of personal loan, but you will receive small amounts in the form of cash. You can get cash loans from banks and other types of lenders.
- Donation crowdfunding. If you are starting a business, you can get a loan from lenders who believe in the potential of your business.
Credit card loans may also be unsecured in some situations.
Get a Loan
If you're looking for a stress-free loan, look no further than Ardmore Finance. We provide consumer installment loans that are fully amortized with equal monthly payments. Contact us to access credit quickly and get favorable loan terms.
