Unsecured personal loans have a few advantages and disadvantages for borrowers. Unsecured personal loans do not require collateral so you are not at risk of loosing personal property if you default on the loan. Unsecured personal loans also give you full freedom over the usage of the funds because lenders do not impose any restrictions on them like other types of loans. Unsecured personal loans can help you to establish a good payment history and positive credit history. They also have faster approval times over loans that require collateral.
The disadvantages of unsecured personal loans are that they usually carry higher interest rates than secured loans and you cannot borrow as much without collateral as you can with it. Depending on your situations an unsecured personal loan may be the solution for you if you require funds.
The most popular advantage of unsecured personal loans is that no collateral is needed to secures the funds. If you default on the loan your assets will be protected. If you do not own a home or have any assets, you can get the money you need with an unsecured personal loan.
Sometimes when you get a loan your approval is contingent on your use for the funds or your use is limited by the loan terms. This is usually not the case with an unsecured loan giving you the freedom to use the funds for any purpose.
If you do not have a good credit history or have not had time to establish one, paying responsibly on an unsecured loan will help you to strengthen or build your credit history. Having good credit is a must and helps you obtain the best interst rates.
No collateral means the approval take place within two business days. Unsecured personal loans are a good way to get cash fast.
A high interest rate is the major disadvantage of unsecured loans. The interest rate always depends on your credit history, but the rate is always higher with unsecured loans rather than secured.
If you need a large loan an unsecured loan may not be enough. Lenders typically do not lend amounts in unsecured loans as large as they do for secured loans. If you need a loan consider the advantages as well as the disadvantages of unsecured personal loans and check out the interest rates of your local lenders.
Copyright (c) 2008 Anthony Griswold
All unsecured articles written by Anthony Griswold are tools to better understanding unsecured personal loans . There are many options and his articles explore them all. http://www.unsecuredapproval.com