In its simplest form, an unsecured personal loan
is a loan lacking collateral that is it is backed only by the
promise to pay of the borrower and their creditworthiness. Unsecured
personal loans take several forms depending on the type of borrower involved.
From the consumer context there are three main types of unsecured
lending: credit cards, traditional unsecured personal loans, and non-financial
consumer lending. While the oldest of the three is the traditional
personal loan, in today’s market it is the smallest of the three,
having largely been replaced by credit card financing, which lenders find
far easier to sell and package for the public (and therefore more
lucrative).
Personal or unsecured loans are not as prevalent as they once were
due to the fact that hey have a sales cost to the financial
institution and are more difficult to package using computerized
underwriting programs. Essentially, an individual secures a loan
from a bank on an unsecured basis on which their personal credit is
the only guarantee. These types of loans are generally paid out in a single
lump sum and charged at higher interest rates than secured loans, such as home
loans.
Make the right decisions when shopping for an unsecured loan and other financial services. Educate yourself!
Please note that the
DebtConsolidationLoan.com has a growing library of financial resources for consumers shopping for
services, such as auto loans and debt consolidation. The best way to make
smarter decisions regarding the management of your money is to become educated. Please visit our
consumer information library.
