Loan Guide to Unsecured Loans and Financing Options

When you apply for a loan, you generally can apply for one of two main types of loans. These two main types of loans are secured loans and unsecured loans. A secured loan is one that utilizes a named item that is being offered by the borrower as collateral. This item has value that is equal to or greater than the loan amount, and it may be real estate, a car, a boat or any number of other items. The second type of loan is an unsecured loan, and this type of loan does not utilize collateral. Instead, the borrower’s credit rating is usually reviewed in greater detail as a part of the loan process, and the bank offers the loan based on the borrower’s perceived ability to repay the loan.[/two_third][one_third_last]unsecured loans online[/one_third_last] [divider] [one_third]Online Personal Loans

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[/one_third] [two_third_last]How Unsecured Loans Are Used
Unsecured loans can be used for any number of things, and the loan terms generally do not limit the use of funds. These loans may be used to consolidate or refinance other debt, make a large purchase, make home improvements or repairs and more.

Common Loan Fees and Costs
Like many other types of loans, unsecured loans typically do have loan fees and costs associated with them. However, these fees and costs may be more affordable than the fees and costs associated with secured loans. It is common for unsecured loans to have an application or sign-up fee. There may also be a loan processing fee. In some cases, these fees and costs are rolled into the loan, and this results in no out-of-pocket costs for the borrower to apply for the loan. Like many other types of loans, these typically will have a late fee assessed if the borrower fails to make a payment on time.

Finding the Most Affordable Loan
When you compare the rates and terms of these loans, it is common to see the terms and general interest rate advertised. Loans also will disclose a figure known as the APR, or annual percentage rate. This is a better figure to compare loans against as it is more inclusive. An APR includes the total costs of the loan in its calculations, including the interest rate and loan fees and costs. This figure is typically advertised, but if it is not, you can find APR calculators online to perform your own calculation with ease.

Applying for an Unsecured Loan
When you apply for an unsecured loan, you will be asked to complete a loan application. The loan application requests information such as your employment and income history, your financial assets, your marital status and more. When applying for a small loan amount, it is common for your loan approval to be based entirely off of the information provided in the loan application. When applying for a larger loan amount, you may be required to provide additional documentation like bank statements, pay stubs and more. Regardless of whether you apply for a larger or smaller loan amount, in most cases, a credit report is reviewed as part of the loan application process. Because collateral is not being offered, the borrower’s creditworthiness is typically scrutinized more closely. A lender wants to ensure the borrower has the physical means of paying back the loan and has a history of repaying debts as agreed.

An unsecured loan is a great resource to use when you need a larger or smaller loan amount and either don’t have or don’t want to put up collateral for the loan.[/two_third_last]

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