Unsecured Loans

Unsecured Loans for Women with No Collateral

An unsecured loan is a loan in which no collateral is required. When you apply for an unsecured loan you will need a higher credit score to take advantage of a lower interest rate because you are offering the lender no collateral or rather no tangible guarantee. You are essentially asking the bank or financeer to trust you on your word that you will repay the loan.

Unsecured loans can be used for a variety of reasons including  vacations, weddings, debt consolidation, home improvements or repair, landscaping, personal use, etc . 

Unsecured loans are harder to get because the lender cannot take your personal property if you fail to repay the loan. They can use other legal measures to get payment from you including a judgement, but because this type of loan is more of a risk to the lender, the interest rate on your loan may be higher than a regular loan or secured type loan.

The loans can be anywhere from 500.00 to 25,000.00 depending on the lending institution. Repayment terms will vary from lender to lender. Length of the unsecured loan can also vary from 6 months to 10 years depending on the lender and the repayment terms that you agree to.

If you are opting for an unsecured loan it is smarter to borrow a smaller amount because the interest rate will be higher than on a loan that is secured with some sort of collateral. Collateral provides a guarantee to the lender and that lowers the risk involved which in turn can lower the interest owed on your loan.

If you have a CD or money market account then some lending institutions will actually provide you a loan against your investment for as little as 2% above the interest yeilded on your investment. In other words, say you have a CD in the amount of 5,000.00 and it's earning 3%. You can borrow 5,000.00 against your CD for only 5%. (2% above the 3% you are earning)

An unsecured loan can actually cost you up to 10 to 15% depending on your credit score, that's why it is smarter to only borrow what you need when using an unsecured loan.

When applying for an unsecured loan you would want a credit score of at least 580 to keep the interest rate wthin reason. The higher your credit score the lower the interest rate will be. If you don't know your credit score then find out first because everytime you apply for a loan the inquiry is recorded on your credit report and too many inquiries can actually lower your credit score.

If you are trying to build your credit score with an unsecured loan, then start with a small loan of say 500.00 on a 6 month repayment plan and then pay the loan on time every month. After that then try a 1000.00 on a 12 month repayment plan and pay that on time as well. You might even buy a 1000.00 CD for 1 year with the money and let it earn interest while you pay back the loan.

After that you can brrow 1000.00 with a secured loan against your CD for a very low interest rate around 2%.

Credit cards are considered unsecured loans because you are not offering any collateral for the amount you are borrowing on your credit card. That's why credit cards have a higher interest rate than you can get at your local bank or lending institution. Unsecured loans offer no guarantee to the lender. To get a really low interest rate on an unsecured loan you will want a credit score of least 720. A secured loan might be better if you haven't reached a high credit score yet.

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