The Ins And Outs of Collateral Free Loans
If you are in a position of requiring some financial assistance you might be looking at options for different types of loans. You might need money for medical bills, unexpected car repairs or even something as simple as an improvement to your home. The first place that you will think about going to borrow money is from your personal bank. One of the most common types of a loan that you are likely search for is that of a collateral free loan. These loans are commonly referred to as an unsecured personal loan and if your bank is going to agree you will have to make out a case for approval; your financial status will be scrutinized.
Unsecured But Slightly Higher On Rates
An unsecured personal loan is a money option where your signature on the contract is the only security that the lender has to commit you to pay the loan back in full. The catch with these types of loans is that you will need to have a pretty good credit score in order to be approved for a loan. It is also important to mention that the higher your credit score the lower your interest rate will be. However if you do not have a good credit score the more likely it is that the lender will deny your application unless you can provide some sort of security to change the loan to a secured loan.
A credit card is a form of collateral free loan but cards have become a source of problems because of the ease with which consumers used to be able to obtain them with a credit limit already approved. Many of the people with current financial problems and in need of finance are in trouble precisely because of the casual way in which they used credit cards before finding they had built up balances that were incurring high interest rates at the same time as their available credit dried up.
Information That a Lender May Ask for?
The documentation and paperwork needed for collateral free loans is the general information that most lenders require for almost any type of loan you could apply for. This will include your social security number, your proof of income, your contact information including your address as well as your telephone number and finally your bank account information. Some lenders may require additional information but the above ones are the basics.
Speed & Safety
Once your loan is approved which usually takes twenty- four hours, sometimes less you can have the money directly deposited into your bank account immediately. If the lender is a traditional lender such as a bank you can have the money in cash into your hands. The lender will not care what you use the money for so there is not a reason to disclose the reason for the loan unless of course you want to. The lender’s concern is merely that you will make the repayments in full during the term of the loan.
Unsecured personal loans are sometimes referred to as payday loans. This type of loan will incur a very high interest rate and there will be a very short repayment period involved. You can extend the repayment period but it will cost you an arm and a leg before you finally pay it off.
If you are in need of cash and you need it quickly these loans might be the best answer for you. However you should be prepared to pay a high price in interest as well as additional administrative fees. But if you have bad credit they might be the solution for you.
Be Cautious and a Responsible Lender
Everyone needs to ask themselves what is the best way out of their financial problems and resolve to seek it? It is difficult to take rational decisions under financial pressure but problems rarely simply disappear. If you are looking to borrow you must have a plan to repay in full and make such economies elsewhere as needed to ensure you do. There are heavy penalties by failure and you have little chance of improving your credit score if you add another blemish to your history. That will condemn you to future problems. The road to financial recovery may be hard and slow but it is worth taking. The day may then come when you can negotiate better interest rates or even provide collateral against your future borrowing requirements.