What is an Unsecured Personal Loan?
Unsecured Personal Loan is a type of financing that allows borrowers to obtain financing to meet their personal needs. The advantage of this loan is that you do not need to provide collateral in order for your funding application to be approved.
How much can I get and what are the interest rates?
Although Secured Loans are easier to obtain and cost less than Unsecured ones, you do not have to face the risk of losing collateral.
Basically, Personal loan amounts range from $ 1000 to $ 100,000 depending on the purpose of the loan. Interest rates can also vary depending on the lender, credit history, income and other factors. Typically, you will receive between 5.99% and 35.99%.
Why do people apply for Unsecured Personal Loans?
Borrowers take out Personal Loans in order to cover any personal needs. However, there are several main reasons why many borrowers apply. Look through the main ones:
- 1. Home improvement. If you are going to renovate your home and cannot provide a collateral, then an Unsecured Personal Loan may be a good solution. Typically, home improvement loans have higher interest rates and shorter repayment terms.
- 2. Debt consolidation. Borrowers take this type of loan in order to cover debts from multiple sources. A Personal Loan usually helps to get more favorable lending terms and interest rates.
- 3. Medical treatments. Borrowers take out a loan to cover the cost of medical care that cannot be covered by insurance or salary. However, this is a quite expensive type of lending, so it is worth considering other options before applying.
- 4. Wedding expenses. As a rule, this type of loan is convenient if people want to take out a loan to cover expenses in any case. With such a loan, you can get the amount you need and fixed monthly payments.
How to qualify for an Unsecured Personal Loan
While the eligibility criteria may vary, the main ones remain the same. Consider some factors that will help you qualify for the lowest interest rates:
If you can provide proof of income, lenders will have some guarantee that you will be able to repay the loan on time.
It is important to show the lender that you are a responsible borrower who pays off debts on time. Thus, a good and stable credit history will be your advantage.
Low debt-to-income ratio.
The lower your debt-to-income ratio, the better, as the lender will be sure that you are able to pay off the debt on time.
The better your credit, the more favorable rates you will receive. Borrowers with credit above 689 FICOs receive the lowest APRs.