The main reason why you might not want to secure a personal loan with collateral is that there is always a risk of losing this valuable asset. And no one wants to be left without a vehicle or house, right?
Thankfully, there are ways to get collateral-free cash. And once you manage to find a legitimate lender that offers unsecured personal loans, you might be able to get your hands on the money that you need in the shortest timeframe.
How do collateral-free personal loans work and what do you need to apply for one? Keep on reading to find out.
Collateral is a valuable asset that the borrower can pledge as security for a loan. For example, when you obtain a mortgage, the home serves as collateral, and for a car loan, the actual vehicle is the asset that secures the loan.
Collateral minimizes the risk for lenders as it helps ensure that the borrower keeps up with his or her financial obligations.
The type of collateral used generally relates to the nature of the loan. See some examples below:
Loans that require some form of collateral can also be called secured loans.
The main thing that you should remember about secured loans is that the lender will be allowed to seize the collateral that was used to secure the loan if you stop making the necessary payments.
Personal loans can be both secured and unsecured. The lenders that do offer secured personal loans would require you to put down an asset as collateral. This will usually forego a credit check in some cases.
Credit unions and some banks offer secured personal loans. In the majority of cases, the lenders would require you to use a certificate of deposit, investment, or savings account to secure the loan.
If you’re afraid of putting down such a valuable asset as your car, CD, or house, then you might want to opt for unsecured personal loans.
As the name suggests, unsecured loans are not secured by any form of collateral. Such loans are also sometimes referred to as ‘good-faith’ or ‘signature’ loans as only your signature on the loan agreement guarantees that you’re going to give the lender the money that you have borrowed back.
This usually means that a lender would be taking more of a risk by lending money to you, so most lenders would require you to have stellar credit to qualify for an unsecured loan.
But the good news is that some online lenders are ready to work with all credit. With Simple Fast Loans, for example, you can apply and get approved for an unsecured personal loan even if you don’t have good credit.
Another big advantage of unsecured loans is that they are typically funded quickly. Once the loan gets approved, the money will be funded as a lump sum, and you would typically have to make the payments on a monthly basis.
Simple Fast Loans will never require any form of collateral to secure a personal loan. So, you wouldn’t have to worry about losing your valuable asset, in case something was ever to go wrong.
Another great thing about doing business with Simple Fast Loans is that the whole application process is easy.
Here is what you would have to do:
You already know that Simple Fast Loans won’t require any form of collateral, but there are also a few other important advantages to know about:
Not every potential borrower has collateral that they can use to secure a loan. And those who do might not want to put it at risk. If you are one of those people, you might want to consider applying for a collateral-free personal loan.
Simple Fast Loans is an online lender that won’t require any valuable asset from you to secure the loan. Simply fill in the easy inquiry form online, immediately get a loan decision, and receive the money you need in the shortest timeframe.