UNSECURED LOANS INFORMATION

Below you can find relevant and useful information on unsecured (or personal) loans.

        

Unsecured Loans

What is an Unsecured Loan?

Unsecured loans are also known as personal loans. Despite the name an unsecured loan is actually a very safe option if you are looking to borrow some money. They are called unsecured because they are not secured against an asset and are used for all kind of purchases. They are offered by a variety of banks as well as independent lenders and loan brokers across South Africa. These loans are generally very varied and flexible and the exact amount you can borrow will depend on the lender. You should shop around and compare different products so you can find the right loan for you.

What are the Benefits?

Unsecured loans are considered to be a lot safer than secured loans. This is because unlike a secured loan you do not have to put up an asset, used as collateral, such as your car or home against the loan. With a secured loan you risk having this asset seized should you default on your payments. An unsecured loan therefore, involves less risk for the borrower.

What are the Disadvantages?

As there is more risk for the lender, as you are not putting up an asset against the loan, you will not be able to borrow as much as you would with a secured loan or for an extended period of time. You will also find that this increased risk for the borrower means that you are more likely to be refused for an unsecured loan if you have a poor credit rating. However, there are some companies that will lend to you despite a bad credit history but the APR is likely to be significantly higher.

What are the Risks?

As with any loan there is an element of risk. With unsecured loans you need to consider the consequences if you are unable to repay them. You could find yourself in a debt situation which could not only be difficult to manage but will also negatively affect your credit rating. This could make it difficult for you in the future.

        


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