An unsecured personal loan is a form of credit without any security
. A person applying for such finance agrees to pay back the loan within a set term. The credit can be used for various reasons like for buying a luxury car, debt consolidation, home improvements and so on. Theses finances can be used as per the borrowers requirement.
The credit is sanctioned on the basis of the borrowers credit history and his repayment potential. The advances are difficult to obtain because of the absence of a security. Lenders have nothing to recover in case a borrower fails to repay the loan amount. To make up for this, unsecured loans come with a higher rate of interest. They are approved quickly as it does not require evaluation of property.
Such type of credit is much safer than secured as the borrowers property is not at risk. They can be taken for a number of reasons like debt consolidation which are taken to repay an existing debt.
The lender first rates the credit worthiness of the applicant before granting credit. People who have lower credit scores may be granted such advances. Though in this case the interest rates are higher; as the lender is at a risk. The advance granted ranges from1,000 - 25,000 for a period of 1 -10years.
Eligibility criteria;
The borrower must be over 18years of age.
The borrower must be a citizen of UK.
The borrower must have an active bank account.
The borrower must have a stable income and a steady job.
Unsecured personal loans can be applied for online. It only requires a simple application form to be filled. The application contains details about the borrowers name, age and employment status. He is also required to give his social security and bank account number. When the application is sanctioned, the finance gets credited to the borrowers account within a day.