It's not always easy asking for help, but sometimes it's necessary. Fortunately, the modern world grants consumers and businesses access to generous lending institutions for the purposes of generating extra capital for personal and/or professional use. Many times, that capital is found via an unsecured loan from a reputable lender. So, is that kind of cashflow good for your bottom line or should you look somewhere else?
What Is an Unsecured Loan?
An unsecured loan is a type of financing which involves money being given to the applicant without that applicant supporting the repayment of the loan with collateral (as opposed to a secured loan which requires the applicant to put up an item of equal or greater value than the original loan). Unsecured loans are popular among people with nearly perfect credit, but they can be obtained by individuals and businesses without good credit if the right lending institution is contacted.
The Pros and Cons of Unsecured Loans
There are many ups and downs involved with applying for and/or receiving an unsecured loan, even if you receive it from a reputable source. Here are the top 5 things everyone should know about unsecured loans before ever applying for one:
- The terms aren't nearly as flexible as loans supported by collateral.
- The monthly payments could be quite a bit higher than expected.
- More personal financial information is generally needed to be approved.
- Loan qualifications are typically more stringent.
- Repayment timeline may be somewhat restricted by comparison.
Finding the Best Source
There are numerous lending institutions that are willing and able to offer unsecured loans to qualified applicants. Look for banks and underwriters with a good reputation among consumers and businesses, but don't settle on the first source just because they come highly recommended.