What is an unsecured loan? In comparison to the secured loans you typically get at banks, unsecured loans require no collateral. When applying for an unsecured loan, lenders will only look at things like your credit score, tax returns, and income to determine whether you qualify.
The main draw of unsecured loans is the lack of collateral; however, because they are dependent on a few personal financial factors, they can be a little more difficult to acquire. So, in order to get approvals, you’ll need to fit within a lender’s preferred qualifications.
While unsecured loans require great credit, borrowers have a few options to get loans if their credit isn’t where lenders would want it to be. You can use a cosigner to obtain the funding you need; however, all of the legal responsibility will be placed on the cosigner should you default on the loan.
What Is An Unsecured Loan?
- Where To Get Unsecured Loans
- What Happens When You Default On An Unsecured Loan
Examples: What Is An Unsecured Loan?
Unsecured loans fit within a variety of categories. You can get personal loans, startup loans, lines of credit, and more as unsecured. However, whether they’re offered that way largely depends on the lender. You can have revolving funds as well as fixed terms with unsecured loans as well.
Where To Get Unsecured Loans: What Is An Unsecured Loan?
In most instances, unsecured loans are offered by alternative lenders, such as Finance Factory. Loans from alternative lenders differ from bank loans because there isn’t any form of collateral. However, because of this, loans will typically have slightly higher interest rates and are overall “riskier” for lenders than secured loans.
What Happens When You Default On An Unsecured Loan: What Is An Unsecured Loan?
With a traditional loan, when borrowers default, the collateral is normally collected. However, with unsecured loans, if a borrower defaults, lenders cannot take away any property. Despite no collection of collateral, lenders will usually get a collection agency to have you pay the debt. If you do not pay the debt, you are taken to court. If the court rules in favor of the lender, the borrower’s wages, assets, and more could be ordered to be used to repay the debt.
Finance Factory Can Help You Get An Unsecured Loan
What is an unsecured loan? Finance Factory can help inform you! If you’re looking for an unsecured loan, let’s chat! Get pre-qualified right now with our quick-step pre-qualification form! And don’t worry, this will not result in a hard inquiry of sensitive information. We just want to learn more about you and your business. Click below to start!