Unsecured loans are another form of personal/ business loans which usually don’t require any collateral in return. They involve other things as well such as credit cards and student loans. Lenders take a high risk while providing this loan because there is no asset to cover the loss in case of insolvency. Thus, reducing the risk of losing assets of the borrower.
Interest rates on such loans can vary between 11% p.a to 26% p.a., including a portion of the principal loan amount. These loans are available for a period of 1 to 5 years (i.e. 12 to 60 months). Borrowers who have a monthly income of INR 25,000 or above can avail these loans starting from INR 25,000 to INR 10, 00,000.
Lenders have their own predefined criteria according to which they evaluate a borrower’s repayment capacity and in turn provide repayment offers that suit the financial interests of both parties.
If you are planning to take an unsecured loan, you should know the essentials attributes related to them. So, in today’s post, we will discuss these attributes and tell how they can be beneficial for borrowers like you.
Online Application Followed by Quick Disbursal
With the increase in technology, almost all lenders have a strong digital and online presence. To apply for an unsecured loan, borrowers just have to login to the lender’s website, fill up an online application, and upload all the necessary documents (i.e. address proofs, ID, and other details related to employment /business). After verification, the loan amount is disbursed within a few working days. Thus, borrowers get fast unsecured business loans.
Affordable Interest Rates
The interest rates charged on unsecured loans are quite reasonable and comparatively lower than the interest charged on credit card usage. The rate can range from 11.99% to 26%. Also, there are two types of interest rates which can be levied on your loan- fixed and floating. The floating interest rate fluctuates with the market whereas the fixed interest rate remains the same throughout the loan tenure.
Lenders do not require any collateral while granting Unsecured Loans. Hence, no legal assets or properties are required to secure the loan. On the other hand, assets like a home or a car are pledged in return for a secured loan. If the borrower fails to repay the loan, the lender can seize the property or sell the other assets to recover the loan amount.
Apart from being easily available, unsecured loans can be utilized in an emergency situation like during the expansion of your business, to purchase new equipment, to buy stock for the festive season, renovation etc. If you are not a business owner you can apply for an unsecured loan to travel to your favorite place or even buy an expensive gift for yourself or your loved ones. No matter what the need, an unsecured loanwill serve your financial needs instantly.
Improves Your Credibility
Unsecured loanscan be the best way for business owners/ individuals to improve their credit score. If your past credit history is messed up, you can apply for an instant loan and make sure to pay it on time. This will help in improving your credit score. A good credit score will be beneficial in getting secured funds from a lender in the future.
In the end, when you are opting for an unsecured loan, you need to be confident you can repay the loan without defaulting in payments- and in doing so, you will find unsecured loans can do wonders for you and your business.
If you are having trouble finding the right lender, we recommend you have a look at Indifi’s financial products. They offer customized loan solutions to help individuals, as well as businesses, meet their fund requirements effectively.