What is an unsecured personal loan?
An unsecured loan is a personal loan that lets you borrow money without having to put up an asset as security against it, such as your house or car. As the risk is higher for the lender, an unsecured personal loan may carry a higher interest rate, shorter loan term, and a lower maximum loan amount than a secured loan.
What are unsecured loans used for?
Unsecured personal loans can be used for just about anything (within reason of course). So whether you want to renovate your kitchen, finance some extra study, facilitate your dream wedding or just jet-set around the globe for a stint, an unsecured loan could help you make your dreams a reality sooner.
Another popular use for unsecured personal loans is debt consolidation. A debt consolidation loan combines multiple loans or credit card debts into a single personal loan in order to manage your repayments more easily and save on interest costs.
Do I need security to take out an unsecured personal loan?
Unlike a secured loan, where you may receive lower interest rates and fees if you use your car or home as collateral for the loan, no security is required to take out an unsecured personal loan. This means you can still borrow money even if you don't have a car or property to use as security, plus your assets won't be in the direct firing line of the provider if you can't repay the loan.