Most of us come across such situations in our lives when we have to get a loan from bank or other financial institutions. Have you ever heard about the unsecured loan? It is a term that is used to refer to such a loan that is issued to the borrower without asking for any guarantee, warranty or security. It means the unsecured loan is made available to the requisite person only the basis of his/her trustworthiness or keeping in mind his/her financial conditions. In simple words, it is just a short term loan that is issued by charging some interest on the principal amount. For this, the borrowers need to have high credit ratings and return the loan within specified time period. An unsecured loan is also called as signature loan or personal loan. There are numbers of advantages of an unsecured loan as discussed below.
Loan without collateral- It is perhaps one of the major advantages of an unsecured loan. To get such a loan approved, the borrower need not provide a guarantee, warranty or security in the form of property or assets. It means anyone can get this type of loan. Whether you are a property owner or a tenant, you are eligible for an unsecured loan.
Quick and easy approval and issuance- It is yet another great advantage associated with an unsecured loan. You can easily and quickly get an unsecured loan approved and get the same issue. It is because there are some formalities. You just need to assure the creditor about return of the loan within specified period. You can get an unsecured loan approved and issued within few minutes. Sometimes it may take few days but the chances of delaying the entire process more than that are altogether ruled out.
Absence of credit checks- There are no credit checks in an unsecured loan. It means you can maintain your high credit scores provided you keep on paying the instalments along with the interest amount on time. In simple words, you can still maintain your repute and scores in the financial institutions and get benefitted in future.
Manageable payment amounts- Again it is one of the key features as well as benefits of unsecured loan. In this type of loan, you need to make payment on weekly or bi-weekly basis. It means you have to make payments of manageable amounts or sizes. You can pay back the entire loan in small instalments and that too within short period of time. It is in fact an easy way to fulfil your urgent monetary needs and return the loan without taking any burdens.
Option of release upon bankruptcy- In some cases, the debtors may get the unsecured loan released by the court. It is done by filing for bankruptcy of your business or such other conditions when you have lost everything. It means you need not pay back the loan in case you become bankrupt. At least you are saved from the extra burden of loan.
These are all some of the major advantages of unsecured loans. Anyone may get this type of loan and cater to his/her financial requirements.