An unsecured personal loan is one not backed by any security. With a secured loan, the borrower offers an asset that serves as collateral against the loan amount. If this individual defaults on loan payments, the lender can sell the collateral asset to get restitution.
In some cases, the collateral does not cover the loan amount and a judgment is ordered against the borrower. Short term unsecured loans avoid all of this, relying only on a promise to repay the loan.
Many beliefs about short term unsecured loans are not true. One of the most common mistakes is to assume that individuals with bad credit or those who are self employed cannot get unsecured personal loans. In reality, there are plenty of lenders interested in offering short term loans to consumers whose credit history is tarnished or who operate their own businesses.
Basic Details About Short Term Unsecured Loans
Some short term unsecured loans do not involve a credit check, making them perfect for the credit impaired. Lenders look at the ability of the borrower to repay the loan based on monthly income.
As long as a person can prove steady employment and a salary that meets the minimum amount specified by the lender, there should be no issues. Some of these loans even help people rebuild their credit.
Those who need cash to cover a temporary financial setback often turn to loans. Short term versions are designed for just these situations.
Consumers receive the cash they need, use it to pay emergency expenses like car repair or medical bills, and repay the loan with their next paycheck. They will incur some interest charges, so the quicker they can repay the loan, the better. Checking to ensure that early repayment does not come with a penalty is a smart move.
Embracing The Web 100%
Some lenders have jumped into the online age with both feet by doing business entirely on the Web. They provide secure online applications for short term unsecured loans.
All a consumer must do is complete one of these and submit it electronically. Once the lender receives the application, details provided are reviewed and verified. If all prove true, the lender issues an email notifying the individual that he or she has been approved for the loan.
It seems that more lenders are not requiring additional documentation to substantiate the details provided in the unsecured personal loan application. In the past, many of them requested that consumers fax documents like paystubs, but fewer lenders engage in this practice today. This makes things much easier for consumers, especially those who do not have home fax machines.
The Swiss Army Knife Of Loans
Short term unsecured loans can be used for nearly any purpose. Lenders often do not ask the reason for the loan, only the amount being requested.
This frees consumers to use the cash to fund exciting purchases like holidays, new electronic equipment, or even a small renovation to the home. For those who do not qualify for credit cards, it becomes possible to make a purchase without providing their own cash.
Since many lenders offer short term unsecured loans, there is major competition for business. Consumers should not go with the first offer they find.
If they do some research, they may be able to find short term loans with a lower interest rate and longer repayment term. This prevents them from paying more interest than loan principal and rushing to repay the money