An Unsecured Loan does not use your property as a guarantee or collateral against the home. Thus, the risk involved for the borrower is low in an unsecured loan deal. These loans can be used for any purpose and are also called personal or consumer loans. The loan amount for unsecured loans is granted on the basis of the credit worthiness of the borrower. This is judged by evaluating the credit score and DTI (Debt to consolidation) ratio of the borrower. Unsecured loans are viable options for the following.Non-homeowners like tenants, students and council renters Homeowners who do not wish to risk their home for a loan Those who require small funds for a small repayment period Homeowners who do not have sufficient equity in their homes For people living in housing association properties
Sometimes, due to unavoidable circumstances like job loss, illness, accident and similar others, the credit score of the borrower gets adversely affected. This creates problems for the borrower to get unsecured loans easily in future. But, with bad credit unsecured loans becoming popular in the UK loan market, borrowers with bad credit history have taken a sigh of relief. A bad credit unsecured loan can earn the following benefits for the borrowers.
No need to offer a security like home Chance to consolidate debts Opportunity to improve the credit score Helpful for funding necessities Relief from credit pressure Better than credit cards that charge very high interest rates
Though bad credit unsecured loans also call for high interest rates since the lender's risk involved in the loan deal is equally high. This is because there is no assurance for the lender that the borrower will repay the loan amount. Neither does the borrower have decent credit history to satisfy the lender with his credit worthiness, nor does he have any security to offer that can be repossessed by the lender in case of default on loan. So, charging a high interest rate on bad credit unsecured loans is legitimate on the part of the lender.
So, whenever your finances fall short and you don't have or don't wish to pledge your home as security for the loan, apply for an unsecured loan. This loan helps in getting fast cash as the processing of unsecured loans is really quick because of the elimination of legal formalities like property valuation by th lender.