Types of Unsecured loans

by Finway FSC Empowering People Financially

No pledging of collateral, and still getting a loan based on credit score is a matter of pride. This clearly indicates that you have never been a defaulter and have developed a stance in the financial market. An unsecured business loan is the best way to gain some extra finances that of course are for a specific purpose. Let us get an insight into the unsecured business loan.

Approval: For this kind of loan, your credibility and credit score is all you have to be good at. Completing the documentation that is rather stringent is the way you get approved for this loan. You are free from any collateral and the risk of losing it. However, it is important that you repay the loan back to the bank on time.

Your income: When the banks are in the process of approving the loan, they tend to understand the income and the consistency of the income. Although the credit scores are there to justify your credibility, the current status is clear only by observing the business balance sheet or the salary receipt in case you are working.

Let us find out the types of unsecured loans:

Unlike loan against property, this loan is given after scrutiny is done to your documents. The documentation is rather long since the bank's money is at risk. Nevertheless, the kinds of loans are as follows:

1. Personal loans: These are unsecured loans and are taken for various purposes. From personal use such as marriage, home renovation, or buying white goods, this loan does not require collateral. It is this reason why the interest is higher. This loan can be taken from NBFC's or banks, depending upon the requirement.

2. Student loan: The typical education loan is of the unsecured type. however, some banks do take collateral for education loan. Largely this type of loan is unsecured.

3. Credit cards: Although, credit cards are considered plastic money, they are kind of loans since you are taking everything at credit. A small rate of interest is charged against the card and one can enjoy the benefits seamlessly.

Taking a loan is not a cumbersome process anymore. The online aspect has made it all the more easier. But taking a loan is a lifetime process. So evaluate the pros and cons and based on them venture into taking loans.