Unsecured Loans

Unsecured loans are loans that one can borrow without the support of any asset. It is basically given depending upon your creditworthiness.

Unsecured loans are also known as signature loans as you don’t have to provide an asset like a house or a car for the loan. Though people can borrow an unsecured loan if they have a good credit score, there are lenders who provide loans to people with bad credit as well.

An unsecured loan can be borrowed if your requirement for money is short. Like secured loans, you cannot borrow a large amount of cash when it comes to unsecured loans. So the question is “How much can I borrow?”

The plain and simple answer to that question is £50 to £5,000. Though it may differ for different lenders.

unsecured loans

Pros of Unsecured Loans

The application process is simpler

When it comes to applying for unsecured loans, the process is simple and fast. Most of the lenders accept applications online. You can just visit their website and fill in the form. Do not provide any wrong information as it may decrease your chances of getting a credit.

Lenders transfer the money to you within a day or less after the unsecured loan is approved.

No risk of losing your property

In unsecured loans, you do not provide an asset as a collateral like in secured loans. In secured loans, if you default on your loan the lender can take your house or the car away from you.

But in an unsecured loan, you are not at any risk of losing your asset as you are not getting a loan against it. If you default on the loan, you can be charged additional fees but there’s no risk to property.

Can be used for minor financial issues

Unsecured loans can be used for small financial need like vehicle repairs or servicing, medical or phone bills, house modifications, etc. As the money requirement is low for these situations, going for secured loans is not a good option as the money you borrow is more than you actually need.

So unsecured loans can help in this situation where the money required is small and the loan duration too.

Cons of Unsecured Loans

Higher interest rates

As the loan you are getting is not backed against any type of asset, the risk for lenders is huge. They may lose their money in return for nothing as they don’t have anything as a security. So because of this sole reason, the interest rates on unsecured loans are high than any other form of loans.

The loan amount can be smaller

When it comes to unsecured loans, the loan amount is not huge. Though it is used for minor financial fixes, sometimes it may not what the borrower was looking for. As the lender is at risk here, they provide what they think you can afford to repay them back. So sometimes it may not be enough for your particular financial need.

Business Loans

What are business loans?

Such loans which help a business to start, run, expand and flourish are business loans. They work as capital for business. Any big or small business can get started with the help of some loans and finances. There are firms and lending institutions who provide such loans at different rates. Also, No Guarantor Loans help a business to start with and that becomes debt for the borrower which he has to return with interest. So the business principal loan adds with interest and becomes an amount. These loans get approved for different business terms.

Types of business loans:

We call these loans with different names as mezzanine financing, microloans. Invoice financing, including loan financing, cash flow loans, business cash advance are some other names for such loans. These loans have different loans categories in it. As unsecured loans, secured loans, revolving credit facilities, Cash advances etc.

These loans have a different rate of interest and eligibility criteria.

Credit union banks provide these loans to new and existing businesses. Loans from credit union are satisfactory for borrowers. Because their interest rates are reasonable.

Distinguish between secured and unsecured business loans:

In secured loans, the bank decides to check bank plans, bank account. ledger and balance sheets. Before granting the loan bank will verify all the sheets and paperwork of the borrower. Bank takes a collateral against secured loans. Bank may seize the collateral in absence of repayments. A collateral works as a guarantee against the loan.

Whereas it does not need any collateral in an unsecured business loan. But all the verification and formalities take place. Unsecured loans are a good option for small businesses. It helps business meeting their random requirements.

Why go for business loans?

Every small or big business need capital to start with. Such unsecured and secured loans help a businessman to plan the growth of the business. A business has some fixed and some hidden expenses when it starts on a small or big level. This loan amount works as running capital for business. Which helps the businessman to hold the business life for the period when there is no profit. This money works as a backup plan as business fuel.

Consumer protection law and legal provisions help to protect the welfare of the parties. These parties are borrowers, lenders and middlemen. One can apply for these loans online or direct with the bank.

If you would want to go for any business loan now, you can check your eligibility for the same.

Category Finance