Unsecured loans have always been popular among students and tenants, primarily because the lack property that they can use to secure a substantive loan. Of late these unsecured loans have proven popular with homeowners too, as there is no need for collateral. Thus the borrower does not risk his property when acquiring a loan. Homeowners opt for this type of loan for some fast monetary need. However little risk is involved, not everyone that secures a loan gets a fair deal and the risk of the lender losing money is greater since he does not have security against his credit. All the lender needs in order to process a loan application is a good credit rating of the borrower. The borrower has to have a commendable history of loan repayment. This shows that the borrower is least likely to default on the repayment.
Britons are said to have embraced this form of loan so much, as the lender does not need security or collateral in order to process a loan application. All a person needs is to show that his credit rating is exemplary. The interest put on this type of loan, is however too high as varied against a secured loan. The time spent on processing the loan is also shortened since there is no evaluation of the property that would have acted as security in the case of secured loans.
As changes in lifestyle occur and a desire to raise living standards occupy our collective psyche, people get less scared to borrow loans so that they may acquire material things. These unsecured loans appear a better option since other credit alternatives like credit cards, have too many hidden charges and are also deemed a bit expensive. People always seem to have a never ending demand for funds and there are many lenders already crowding the market, hence this over abundance leads to people borrowing more. The many lenders keep on offering more attractive packages in order to lure in new customers. All the borrower needs to do is research the market so that he may end up with a deal that best suits him.
There being many players in the lending field has led to better packages for the market yet truth be told the interest rate is still way higher than that levied on secured loans. Of course the lender does not attach collateral against the loan but he considers a number of issues before processing the loan. These reasons include, the credit history of the borrower, this shows his ability to pay based on how he has dealt with repayment of loans before. Another reason is the borrower’s job and his prospects at the said job, how he has handled credit cards, his bank records, and also the dependants that he has to take care of. After a thorough look at all these factors, the lender then makes the decision on the amount of loan and the time duration for repayment, and the borrower goes home with a big smile on his face, that’s until repayment becomes a problem.