Anyone can slip into a position where they have to deal with financial problems. In such circumstances, an unsecured personal loan is an excellent way of overcoming the difficulties in a shorter time span. It is offered to individuals for their personal use without providing any valuable assets as collateral. That’s why; it is named as such.
As compared to secured loans, unsecured loans tend to have greater interest rates. So, let’s start discussing types of unsecured loans that you can consider.
Unique features of unsecured personal loans
- Minimum risk for the borrower
The borrower doesn’t have to worry about losing his asset possession in case of default.
- Good credit score
Good creditworthiness of borrower can help a person to get a personal loan at lower interest rates.
- Varied application
It has been seen that the personal loan is widely used for various purposes, like buying jewelry to refurbishing the home. This is so because; the lenders have nothing to do with the reasons you are applying for a personal loan.
Different kinds of unsecured personal loan
- Signature loans
Going by its name, these loans are designed as installment that has to be repaid on time. The prime benefit of these loans is building a credit history so that anyone can easily apply for the loan. Such loans are used for medical treatment, weddings, home renovation, and others.
- Line of credit
It acts as a credit facility where one can withdraw an amount using a credit limit. Simply, the Line of Credit works like a revolving credit that once repaid; the amount can again be available as a credit facility. The main advantage of using this loan is that one has to pay the interest on the withdrawn amount and not on the complete credit limit.
- Credit card
A credit card has got instant popularity because of its easy accessibility to the users. Usually, the interest rates in a credit card can go high upto 24-36% p.a. if the payment goes beyond the due date.
In short, selecting an unsecured personal loan is a good choice in a financial emergency. One can check the unsecured loan website to get a clear idea about it and apply for the same right from the comfort of their home.