An unsecured loan is a loan that does not ask for any collateral as a security for the funds borrowed. By and large, the interest rates on these loans are far higher than the corresponding secured loans due to their high-risk profile. An online unsecured personal loan is one of the unsecured loans whose interest rate is very steep. Before applying for one, read on to find out all about this type of loan and decide if you need one.
An online unsecured personal loan is also called as a Payday loan or a Cash Advance loan. These names imply that this is a short-term loan that you can use to meet your financial requirements till you get your paycheck.
These are the distinguishing factors of an Online Unsecured Personal Loan:
Loan amounts range from $100 – $5000.
Loan duration is very short, generally 7, 14, or 30 days.
Very high interest rates, starting from $10 to $30 for each $100 borrowed.
Prompt approval time, normally within an hour.
Loan amounts are transferred into your checking account.
Loan funds are withdrawn from your checking account..
Some lenders offer 4 term extensions.
You should opt for an online unsecured personal loan only if you have no other means of finance. If you sum up all the fees levied on this loan, you may be charged as much as $300 on a $1000 loan borrowed for a week. Some states consider these offers as illegal and the state attorney generals are closely monitoring them.
However if you opt to go for an online unsecured personal loan, implies there are no other sources of funding available to you. This happens if:
You have just filed for bankruptcy and need cash urgently.
Your credit rating is in a deplorable state that nobody is willing to loan you even a small amount.
You have exhausted all the normal sources, your credit card has reached its limit and the cash advance limit is exhausted.
But remember, caution is the watchword when it comes to applying for these loans. Ensure that when the loan period is over, you will already have funds in your account or else your situation could worsen.
Tags: Loans, Online Unsecured