Unsecured Loan Meaning – What Does It Mean?
An unsecured loan meaning you don’t have to put up any assets like your home or car as collateral for financing. Instead, lenders evaluate borrowers based on their credit, income, and other financial credentials. Common examples of unsecured loans include personal loans, student loans and credit cards.
Generally, the best rates are reserved for borrowers with good to excellent credit. Because of the increased risk lenders take with unsecured debt, they tend to charge higher interest rates than secured debt. Lenders might also have more strict qualification criteria when it comes to unsecured loans, so not everyone will qualify.
Unsecured Loan Meaning: Breaking Down the Basics
If you’re looking for an unsecured loan, shopping around is essential to find the best terms. Many online lenders offer prequalification so you can compare likely rates without a hard credit inquiry, and some banks and credit unions may do the same. This will help you avoid the potential ding to your credit score that comes with a full application for an unsecured loan.
If you’re unsure whether an unsecured loan is right for you, consider talking to a trusted adviser. They can explain how unsecured loans work and help you determine the right borrowing option for your needs. They can also help you speed up the application process by collecting the necessary documents, like tax returns and W-2s before you start. They can also help you negotiate with lenders to get the best rates. They can even recommend a lender or broker to meet your needs.