Different Types of Unsecured Loan
Simply, an unsecured loan is when someone receives a loan without the requirement of any collateral as security. A lender usually provides an unsecured loan, looking at the creditworthiness of the applicant. So this can be a private personal loan taken from family or friends, or a financial institution. Individuals can use an unsecured personal loan for a variety of requirements. Be it for wedding expenses, paying medical costs, education, or even going on a vacation.
Key Benefits of An Unsecured Loan
Short payment term: Unsecured loans are usually available to tide over a particular short-term situation. This is why the payment terms for such loans are shorter and range from 1 month to 5 years.
No collateral required: All types of unsecured loans are granted based on the creditworthiness of the borrower. Given that creditworthiness of borrowers is assumed to be high, there is no requirement of collaterals for security against such loans.
Flexible interest rates: Unsecured loan interest rates can vary. This usually depends on the loan amount, tenure selected and, most importantly, the credit score of the applicant.
Not eligible for tax benefits: Unlike secured loans like home loans, unsecured loans do not qualify for any tax benefits.
Loan amount and disbursal: Unsecured loans have lower amounts and quicker approval to disbursal processes. In general, unsecured loans are availed to tide over a short-term financial crunch like home renovation, medical treatment, etc.
This means that the loan amount is usually smaller as compared to let’s say, a home loan. Since unsecured loans do not require collaterals, the process requires lesser details/paperwork from the applicant, and, hence, they have a faster approval and disbursal process as compared to secured loans.
What Can Unsecured Loans Be Used for?
- Weddings: Considered to be very significant in our lives, weddings come with expenses that sometimes go over what you initially planned for. A wedding loan is a type of unsecured loan that can help in meeting such expenses.
- Education: High cost of education can be an impediment at times, be it someone pursuing a higher degree or a parent looking for their child’s education fees. An unsecured loan like an education loan is availed keeping these costs in mind.
- Home Renovation: Every home requires some changes as the needs of a family change over time. You can overcome a shortfall in funds that may arise during such times with a home renovation loan.
- Medical Emergency: This loan is offered to individuals looking for funds that could help out in a medical emergency.
- Travel: A person looking to travel can opt for travel loan. The funds from a travel loan can be used for any of your travel expenses. Tickets, hotel bookings, shopping, and even tour activities can be paid for using such a loan.
- Vehicle: An individual looking to buy a vehicle, either a new or second-hand one, can use this loan for any expenses related to the vehicle. You can use this unsecured loan to purchase a two-wheeler or a four-wheeler of your choice.
A personal loan that doesn’t require any collateral can help ease out your financial troubles. Finnable offers various types of unsecured loans.
A little help in your time of need can go a long way. This is why we have designed our personal loans to do just that for our customers. Our loans come with features such as flexible tenures, high loan amounts, simple application process, minimal documentation, attractive interest rates and limited disbursal time. No matter what you need, get in touch with Finnable. We will assist you with all your personal loan needs.
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