Apply for an Unsecured Loan

What is an Unsecured Loan?

Unsecured loans do not require borrowers to back the loan with collateral. Collateral is any item of value that’s pledged against a loan. For example, a home equity loan is backed by the equity in your home. Equity is the market value of your home that is greater than value of the loan on it. If you don’t pay the loan back, the lender can take your house and sell it to pay back the money you owe on the loan.

A title loan is secured by your car title, if you default the ownership of your car transfers to the lender. Even if you get a loan at a pawnshop, you have to secure it with jewelry, a computer or other item with resale value. This gives the lender a way to get his money back if you don’t repay the loan.

Why do some lenders do unsecured loans?

Different lenders use varying methods to evaluate a borrower’s creditworthiness. Some look at collateral, while others analyze credit reports, which show how borrowers handled debt in the past. You usually need a fairly high credit score to get an unsecured loan with your credit history.

A few, called payday lenders base lending decisions on your job and paycheck – not your credit rating. If you have a job and draw a regular paycheck, they consider you a good credit risk and will loan you money. In a sense, your job and paycheck secure the loan for you.

How much do I have to earn?

Different lenders have different income and credit requirements and may require less income with a higher credit score. Payday lenders usually require that you make at least $1,000 a month. You also need to provide a paystub or other proof of income.

Are there any other requirements?

Requirements vary from lender to lender. However, you will likely need to have a job at the minimum. You also need to have an active bank account and be 18 years old or older.

The bank account shows you have a certain level of financial responsibility and some lenders transfer your funds to you electronically. The lender will deposit the loan proceeds into your bank account and may also have you set up automatic withdrawals to pay back the loan on certain dates.

Why do some unsecured loans have higher interest rates?

Think about it from the lender’s point of view. It is taking a bigger risk by lending money without collateral to back the loan or proof of a good credit history. The way the lender offsets the risk is by charging the borrower more for the loan. If you have a good credit rating your interest rate will be lower. If your credit score is lower or the lender disregards it, you’re interest rate will be higher.

What are the repayment terms?

Borrowers repay unsecured loans based on credit scores over a series of installment payments. Installments are usually paid monthly. The term can be a few months or a few years. It all depends on the lender and the type of loan you qualify for.

You pay unsecured payday loans back over a shorter-time frame based on the day you get your paycheck. You pay some back at your next pay period, while others are extended for two or more pay cycles. Review your loan approvals and ask your lender for specific repayment terms.

How do I apply?

We’ve made it quick and easy for you to apply for a loan. Simply enter some basic information on our secure online application form. Submit the form and our network of lenders will review your information and send you loan approvals. Then, you can review your loan offers in the comfort of your own home to figure out which one is best for you. You don’t have to worry about pushy loan officers pressuring you or face-to-face loan declines.

What do I do when I decide on a loan offer?

After you review the loan offers and pick one, your approval will provide instructions on how to proceed. Make sure you read the terms and costs of the loan carefully. Also, ask questions if any thing is unclear.

What will it cost?

The cost of the loan – fees and interest rate – will vary based on the loan you choose. But, you don’t pay any thing until you accept a loan. Typically, the lender factors the cost of the loan equally into each payment.

What about extra fees?

If lenders charge an upfront fee it should be spelled out in the loan documents. Again, if you’re unsure -- ask. Also, if you pay late or miss payments your fees or rate may go up. So make sure you understand how late fees are added.

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