amrsalah1: non secured loans

Tuesday, May 3, 2011

non secured loans

Seeking a non secured loan can mean obtaining needed cash without placing any item of personal property at risk. These loans get their name from the fact that there is no collateral involved to serve as security for the debt that is being undertaken. The offering of collateral will in general reduce the risk to the lender since an item of value can be seized if the borrower should default on the loan. In the non secured loan, there is no such safety net. A lender is depending on the honor and good name of the borrower for assurance that the debt will be reimbursed. Of course, since there is more risk being assumed by the lender, there will be higher costs associated with these lending opportunities. These costs will usually come in the form of higher interests rates as well as the possibility of extra fees. However, if a potential borrower has excellent credit, these costs may not be excessively high. A borrower may have to be satisfied with a smaller loan amount when there is no collateral accompanying the loan.

There are many features that could influence the interest rates and any additional fees. A borrower's prior credit history could be a factor. Lenders understandably prefer to lend money to individuals with excellent credit and a solid track record for making good on any previous loans. With some lending agreements, the borrower is able to decrease the amount of interest paid if that borrower takes pains to make all payments on time. There are a number of different examples of the non secured loan. Some financial providers cater to individuals with poor or no credit. While it can be very easy to attain loans from these providers, the lending terms can be very steep. Anyone who obtains a poor credit non secured loan should expect to pay much higher interest rates. Many of these loans are extremely short term and are known as pay check loans or quick payday advances. The criteria for these short term loans will usually include little more that proof of age, Unites States citizenship, full time employment, and an active bank account. Longer term loans can be financed over a period of years and can be used for such things as home improvement, vacations, debt consolidation or any number of other purposes. These loans will also often require a minimum amount of documentation and offer speedy approval.

This kind of lending opportunity may be known by several names including signature loans and personal loans. Attained mostly through the good name of the applicant and the size of the applicant's income, they can be a little more difficult to get than shorter term financing. Since there is no collateral attached, there is much less risk to the borrower. Within the category of the non secured loan there are different types of loans. Personal loans are repaid by the individual borrower. Unsecured business loans represent debt that is taken on by a business. A third category is something called the unsecured business loan with a personal guarantee. This last approach gives the lender a little extra cushion in that in the event of a business default, the lender can turn to the individual borrower for repayment. Anyone attempting to build a new business knows the importance of attaining funds to help the business grow. A non secured loan can provide those funds. The Bible talks about what a blessing it is to give praise to God. "I will praise the Lord according to his righteousness: and will sing praise to the name of the Lord most high." (Psalm 7:17)

There are many reasons for seeking a non secured loan. Some individuals use this unsecured debt to pay for such expenses as education, debt consolidation or even vacations and luxury items. Potential borrowers should always take care to make sure that the reason for borrowing justifies the debt that will be undertaken. In addition to the standard loan framework, there is also the availability of the unsecured personal line of credit. Using this approach, the borrower can attain funds at their own discretion, calling upon the line of credit only when needed and, consequently, only borrowing what is actually necessary. There are financial services that can help an individual or business decide what kind of lending approach is the best fit for them as well as matching the individual or business up with the appropriate lender. Those with a solid credit history as well as businesses with a healthy profit record and business plan can generally attain financing at reasonable interest rates and agreeable terms.

The main difference between the non secured loan and secured loans is the presence of collateral. Home mortgages are generally examples of secured debt since the house itself serves as collateral for the mortgage. Any time that a piece of property such as a car or items of furniture serve as security for a loan, that property can be taken away from the borrower if the borrower fails to make the payments. The benefit of unsecured loans is that there is no property that will be lost in the event of default. If a home is used as security for a mortgage, the financial institution that lent the money in the first place has the right to seize the home and place it up for sale in order to repay the debt if the borrower defaults. Many borrowers believe that unsecured loans are always a better deal that secured ones. As long as a borrower's credit score is high enough, the cost of this unsecured debt is not prohibitive.

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