The unsecured loan and the collateral

Posted August 12, 2013 by alexcarter12

Loans are offered to general people as a financial support in order to maintain a decent standard of life and establish or achieve our dreams.

Loans are offered to general people as a financial support in order to maintain a decent standard of life and establish or achieve our dreams. But once a loan is availed it needs to repaid and with interest. No one wants to risk their money neither the money lending organizations or banks. They demand the security of the money they are offering. Based on this the loans are of two types. They are the unsecured and secured loan

Unsecured loan
The unsecured loans are the loans where no such security is offered against the money borrowed. They are generally the personal loan. Since there is no security offered against the money borrowed, the amount of money the lender lends is small. The duration of the loan tends to be short and the interest on the loan is very high. These features of the unsecured loan make it very expensive. But there are ways to avail this loan at lower interest.

When collateral is offered against the unsecured loan the interest rate of the loan fall, the amount of the money offered rises by a huge scale and the even the length of the termination of the loan drastically increases. Offering collateral means that the loan is availed against an asset of at least equal value of the money borrowed. If the borrower fails to repay the loan the money lending organization seizes the asset and regains its money back.

No collateral loan
In the recent time, with increased competitiveness in the market, the loans are offered in low interest rate even without offering collateral. But there are certain requirements one needs to fulfill in order to avail a no collateral loan. The requirements are discussed below.

The applicant must have a high credit score. The credit score is generated from the credit report. The credit report is prepared based on the applicant’s transaction records of credit with the banks. A high credit score ensure that the applicant pays his loan regularly and on time. Therefore the lenders get assured about the repayment of the money.

The applicant must have a stable job. This needs to be proved by a valid job certificate which needs to be issued by the applicant’s employer. This certificate will state the validity of the job, the nature and type of the job and the records of the applicant.

The monthly income statement of the applicant is also required. This will reveal the capability of the applicant about paying the monthly installments of the loan on a regular basis. Therefore before applying for the loan, the income statement of the previous few months needs to provided.

Still before availing the no collateral loan, check it properly. The loan might turn out to be a spam. Before availing the loan check the terms and condition of the loan and the repayment policy of the loan with great care. In many cases, the borrower ignores it and the finds himself in deep trouble while repaying it. For More Visit :
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Last Updated August 12, 2013