Unsecured Loans

Unsecured loans are available from most banks in India. It is likely that you will need a good credit rating to apply for an unsecured loan. Unsecured personal loans are a popular way of borrowing money. Unlike with a secured loan it is not necessary to provide an asset as collateral for the security of the loan. Depending upon your credit rating you should be able to borrow a substantial sum over a period of time. In some cases it may even be possible to borrow over a ten year period. As with all loans it is worth keeping the amount you borrow to a minimum as the repayments on large loans can become extremely expensive. If you are unsure about the type of loan you want it is worth seeking expert financial advice. Any loan you decide to take out will come with serious financial obligations and getting into debt is best avoided. Make sure loan repayments are made on time and it is essential that you read the terms and conditions.

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Unsecured loans are available to borrowers

Loans known as unsecured loans are so called because you do not have to offer an asset as collateral for the security of the loan. Overall this means that unsecured loans also known as personal loans carry less risk in comparison to secured loans. If you are applying for an unsecured loan whether or not you are accepted will largely be judged upon your credit history. You will need a good credit history to ensure that you are eligible for most unsecured loans. However, there are also a number of companies who can lend to you even if you have bad credit.

Applying for unsecured loans

An application for an unsecured loan is primarily based on your personal credit rating, financial status and the amount borrowed, and you are not required to offer your home as security for the loan. You are of course legally bound to pay back the loan as agreed. Unsecured loans are also known as personal loans. The top three reasons people take out an unsecured loan is to consolidate debts into one possibly less expensive loan, to carry out DIY projects at home or to purchase a car. When deciding whether or not to offer you an unsecured loan, the lender will look at your personal credit history and assess how much of a risk is involved in lending you money. The rate of interest you are offered will reflect that level of risk.

The purpose of unsecured loans

An unsecured loan can be used for just about anything. This flexibility or freedom can really mean a lot to someone who has been struggling to make ends meet, has a big bill coming up, or needs help with a medical expense or something similar. Other types of funding may say that the money can only be applied or used towards specific things. Using an unsecured loan means that a person can pay off debtors, work on repairs for a house, or use the funds in any way they please. To pay back an unsecured loan, one can pay in small increments on a weekly or monthly basis or can pay the whole sum back at one time. It is important to stay on top of the payments so that the loan is repaid and this type of funding can be obtained in the future, if needed. Payments can be made via mail or can be made online, too.

The risks associated with unsecured loans

The figure that you will need to make yourself aware of is the interest rate or APR (Annual Percentage Rate). It is this rate which will determine how much you are borrowing and how much you will have to repay. If you have a high APR then you will have to pay back a lot more in interest. The more you have to pay back, the higher the risk of defaulting payment. If you default on your repayments you could find it has a detrimental effect on your credit rating.

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