Unsecured loans, as the name suggests, are loans that do not require any security from the borrowers. Usually these loans come with high interest rates, but if you search them on the internet, there are high chances of getting a desirable low rate unsecured loan that would suit your requirements.
Advantages of unsecured loans:
The biggest advantage of unsecured loans is that they are risk free. There is no need to place any of your assets like property or home as security. Therefore, you do not stand the risk of losing your property or any other asset if you fail to repay the loaned amount plus the interests rising thereof.However, this does not imply that you have a lee way. You still need to pay your EMI's at the right time, failing which the lender is at free will to take legal action against you.
Coming back to advantages, another benefit that you get with unsecured personal loans is in the legal processes. There is no asset involved in this type of loan, hence there is no requirement of assessment of the equity in asset. This reduces the processes of loan application and approval, especially when compared with that of secured loans.This also gives us the benefit of speed. Usually online unsecured loans take less time to get approved in comparison to secured loans.
Disadvantages of unsecured loans:
While we are aware of the advantages of unsecured loans, we should also have a look at the disadvantages they hold. Unsecured loans clamp down on the borrowers with stricter terms and conditions, shorter repayment periods and high interest rates. These disadvantages arise due to absence of collateral.
Article Source: EzineArticles
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