Unsecured Loans

Unsecured loans allow you to borrow money without having to put up an asset, such as your house or car, as collateral. They are a popular product in South Africa because these personal loans involve less risk for you. However, because they are not secured against an asset these loans are more for people with a good credit rating because they are seen as less of a risk for the lender. The loan can be used for any reason. With the chart below you can find the right provider by comparing the different amounts you can borrow and the terms and conditions for each. Please make sure that you read the terms and conditions of these loans as thoroughly as possible so that you are certain that you understand your financial obligations and what the loan will cost.

Unsecured loans can be an easy way to get money whatever your financial situation may be. Be sure to fully understand unsecured loans before you apply.

What is an unsecured loan?

When you take out an unsecured loan you can borrow money without having to provide security against it. A secured loan is where you are required to put up an asset against the loan which is used as collateral which is usually your home or car. This makes unsecured loan a less risky option for borrowers because with a secured loan you risk having this asset seized should you miss payments. This can ultimately mean having your home repossessed. This won’t happen with an unsecured loan which is why they are popular.

What about you credit rating?

Unsecured loan lenders will look at your credit rating when deciding on whether or not to approve you a loan. You will find that the better your credit rating the better loan conditions you will be offered. However, you will still be able to find unsecured loans whatever your credit rating. Payday loans and loans for people with bad credit are popular unsecured loans.

If you have a bad credit rating you will find that you will not be able to borrow as much if you had a good credit rating.

Is an Unsecured Loan right for you?

If you do not own a home or do not have much home equity an unsecured may be your best choice for getting the loan that you need.

If you cannot get a secured loan, which can have lower interest rates, an unsecured loan can be considered.

What are the disadvantages?

The main drawback of an unsecured loan is that the interest rates are likely to be considerably higher. This is because unlike secured loans, lenders do not have the security of your asset should you default on the loan. This makes the loan a bigger risk for the lender.

Interest rates are also likely to be high because you will be able to find unsecured loans for people with bad credit. However, these rates can be lower than many credit cards.

Finding the right Unsecured Loan

If you are considering an unsecured loan, make sure you look at all of your options. Use the table above to compared different products from a variety of lenders.

Remember that different lenders have different fees so you need to make sure you take the time to compare loans. You need to make sure you read the terms and conditions of the loan fully and that you are aware what happens if you miss payments. By missing payments you risk having to deal with high interest charges and other fees which can easily accumulate. You will also damage your credit score.