Essential Facts About Unsecured Personal Loans

Many a times you may need to take out personal loans to meet your financial needs. However, you may not possess a valuable item or don’t want to pledge a collateral in order to take out a loan. In such cases, you can take out unsecured personal loans, which don’t require any security or collateral against the loan amount. However, you may have to pay high interest rates on your unsecured personal loan.

Factors affecting your eligibility criteria

Most lenders will consider the following factors while assessing your loan application.

• Your age: You must be more than 18 years of age in order to apply for a personal loan. You should obtain an unsecured personal loan at a certain age such that you don’t exceed 65 years at the completion of the loan term.

• Your current salary: Most lenders will approve your loan application on the basis of your current salary. Therefore, you’ll have to show proof of your income in case you’re employed and your tax returns if you’re self-employed.

• Your employment status: Lenders usually look for a stable job in order to approve your loan request. Therefore, if you are self-employed or do not have a stable income, then you may have to pay high interest rates for taking out unsecured personal loans.

How to apply for unsecured personal loans online

You can apply for an unsecured personal loan online. All you need to do is just browse through the websites and look for the eligibility criteria that vary from one lender to the other. If you satisfy the qualifying factors, then you apply for a personal loan by simply filling out an online form that requires some basic information. You may need to fill out information regarding the loan amount, loan term, purpose of the loan along with some personal details. The lender will verify the details and will approve the loan. Quick approval is one of the greatest advantages of taking out personal loans online.

Unsecured personal loans: Advantages and disadvantages

The advantages and disadvantages of unsecured personal loans are discussed below.

Advantages:

1. No collateral is needed: You don’t have to pledge any collateral to take out personal loans.

2. No agent is required: You can take out an unsecured personal loan by simply filling out an online form. You don’t have to take help of an agent to take out these loans.

3. Help to meet emergency financial needs: A personal loan can help you in emergency when you are short of cash.

Disadvantages:

1. High interest rates: Lenders usually charge high interest rates on unsecured personal loans; prepayment penalties and service charges are also comparatively high.

2. Strict eligibility criteria: The eligibility criteria for taking out unsecured personal loans are comparatively strict as you don’t have to pledge any security.

It is advisable that you shop for rates before you take out an unsecured personal loan. Apart from this, you should also consider other factors (such as, repayment options, loan term, prepayment penalties), while taking out a personal loan.