Unsecured Loans for Women
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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