What Banks Offer Unsecured Personal Loans

What To Watch Out For With Unsecured Personal Loans

While unsecured personal loans may be a good option for many people, there are a few things to watch out for.

• Interest rates. Because collateral isnt required, unsecured loans can have higher interest rates than other products such as home equity or auto loans where your property is used to secure the loan. Rates typically can range from around 5% to 36%, depending on the lender and your creditworthiness.
• Origination fees. Some lenders charge a fee to cover the cost of processing the loan. These fees often range from 1% to 6% of the loan amount.
• Prepayment penalties. Some lenders charge a fee if you pay off your loan early. But paying off your loan early can save you money on interest charges. Try to avoid loans with this type of fee.

Best For Home Improvement Loans: Lightstream

• Starting interest rate: 2.49%

LightStream specializes in home improvement loans with fast funding times and your home isnt required as collateral.

• Wide range of loan amounts

• No fees

• Maximum/minimum amount you can borrow:$5,000 to $100,000
• 2.49%19.99%
• Fees: None
• Minimum recommended credit score: LightStream does not disclose a minimum credit score. It will consider the “unique nature of each individual’s credit profile.”
• Other qualification requirements: Applicant must have several years of credit history with a variety of accounts and a good payment history, evidence of ability to save, and stable and sufficient income and assets to repay currents debt obligations in addition to a new loan from LightStream.
• Repayment terms: 24 to 144 months
• Time to receive funds: Within the same day of loan approval if approval process and final verification is completed by 2:30 p.m. ET
• Restrictions: Minimum APR available will depend on the purpose for your loan
• Notes: APR of 2.49% is only available for loan amounts between $10,000 and $24,999 with repayment terms of 24 to 36 months. Only applicants with excellent credit are eligible for the lowest rates.

Read the full review: LightStream Personal Loans

Faqs On Unsecured Loans

1. What is Unsecured Loans?

Unsecured loans are loans that are not backed by any security or collateral. In case of a default, the lender cannot use any collateral to recover the loan amount from the borrower. Even if the borrower has assets and insurance policies in his/her name, the lender cannot use them to recover the loan amount. Hence, the risks associated with unsecured loans are significantly high for lenders.

2. Can a self-employed person take an unsecured loan?

Yes. Unsecured loans can be taken by self-employed customers too.

3. What is the maximum loan tenure offered on unsecured loans?

Most banks offer a maximum loan repayment period of 5 years for unsecured loans. However, this can vary from lender to lender. Therefore, it is advisable that borrowers of this kind of a loan should always learn about the maximum loan tenure offered by the lender before he or she decides to opt for this scheme.

4. What are the purposes for which unsecured loans can be availed?

Unsecured loans can be taken under two categories namely personal loans or business loans. An unsecured loan that is taken to meet any personal financial need like medical expense, house renovation, etc. is called a personal loan. Whereas, an unsecured loan sought for business purposes like expansion of business, payment of tender, etc. is called a business loan.

5. Can I apply for an unsecured loan online?

Yes. Many banks provide the option of online application of unsecured loans.

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How Hard Is It To Qualify For A Personal Loan

Borrower qualifications for personal loans vary by lender. In general, an applicant will need at least a fair credit score to qualifyalthough it is possible to get a personal loan with bad credit. That said, borrowers with good to excellent scores will qualify for the lowest interest rates, larger loan amounts and more flexible repayment terms.

Many lenders offer a prequalification process that lets you find out which loans and terms you qualify for based on a soft credit inquiry. This is a great way to shop for the most favorable personal loans without negatively impacting your credit score.

Regions Bank Credit Line

Regions Bank’s unsecured line of credit offers borrowers low limits from $500 to $3,000 and the credit line will cover any checking account overdrafts. You won’t pay a fee to cover an overdraft, but if you take out a cash advance, it will cost you the lesser of $10 or 10 percent of the withdrawal amount.

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Alternatives To Personal Loans

Personal loans arent the only alternative available for managing high-interest debt, covering emergency expenses, or consolidating credit cards.

If you need cash to do repairs or remodel your home, you might be interested in home improvement loans, which are secured by your home and tend to feature lower interest rates than personal loans.

Other alternatives to personal loans include:

Payday lenders secure their money by demanding a postdated check or direct access to your checking account to withdraw the funds by your next paycheck.Failing to settle either of these loans in time traps borrowers in an endless debt cycle, where they have to renew or roll the loan over to a further date, stacking up higher interest rates and fees.

Title loans lenders use your vehicle title as collateral, so they can repossess and resell your car or motorcycle if you dont pay it back in time.

We do not advise these loans and stress that you consider alternative options. If you are limited by bad credit, and personal loans are designed specifically for that. If it is a time-sensitive issue, many reputable online lenders guarantee fast funding, with same-day or next business day disbursement.

Documents Required To Apply Unsecured Loans

Documents required for salaried applicants are:

• Duly filled loan application form
• Couple of passport-size photographs of loan borrower
• Identity proof passport, driving license, voters ID, PAN card
• Proof of residence utility bill, passport, etc.
• Salary slips for last 3 or last 6 months

Documents required for self-employed applicants are:

• Office address proof for self-employed individuals
• Proof of continuity of business
• Processing fee cheque
• Duly filled loan application form
• Couple of passport-size photographs of loan borrower
• Identity proof passport, driving license, voters ID, PAN card
• Proof of residence utility bill, passport, etc.
• Salary slips for last 3 or last 6 months

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How Do You Get The Best Interest Rate

To get the best interest rate on your unsecured personal loan, shop around for the best deal. Compare the interest rates and terms offered by different lenders to find the one thats right for you. Its also important to have a good credit score, because this will help you qualify for a lower interest rate.

Top Uses For Unsecured Personal Loans

What you do with your unsecured personal loan is ultimately up to you, but we wanted to share some reasons weve heard from customers for taking on loans with us!

Debt Consolidation: The average Canadian household carries a debt loan of 170% of their disposable income. Between mortgages, lines of credit, student loans, car payments and credit cards, many of us wind up paying out a lot of money every month to a lot of different sources. Each of these debt streams comes with its own interest rates and repayment schedules, which can turn into a rats nest when you sit down each month to figure out your obligations. Debt consolidation is the process of reducing the number of different payments you have to make each month. One way to do this is by taking out a new personal unsecured loan and using it to completely pay off two or more of your previous debts. This way, all you have to do is pay off the new loan, which locks you in to a more favourable interest rate overall.

Business Loans: Are you the proprietor of a small business, or looking to become an entrepreneur? Start-up expenses can be challenging, and its difficult to access working capital when you already have a checkered credit history. Magical Credit can help you become a little more liquid with a short-term unsecured business loan. With the increased income your business generates, paying off your loan with us may be easier than carrying on without it!

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Is A Personal Loan Worth It

Personal loans are best used for debt consolidation, planned home repair projects, and emergencies but only if the interest rate and repayment terms are favorable. If a personal loan is taken out without a clear plan for how to repay it, it is never worth it. If you have bad credit, no credit, or if youre unemployed, personal loans are probably not worth it.

Personal Loan Vs Credit Cards With Promotional Rates

If youre looking to consolidate debt, then you may want to consider credit cards with promotional rates instead of a personal loan. Many credit cards come with 0% introductory APR on purchases and balance transfers for as long as 15 months, and those go a long way in helping pay down debt if you can qualify for such offers. Keep in mind, however, that its strongly encouraged that you pay off the card within the introductory period. Otherwise you may face interest rates between 15% and 25%. Additionally, if you miss a payment, the 0% APR will revert to the regular purchase and balance transfer APR.

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Unsecured Personal Loans Faq

Whats the difference between an unsecured personal loan and a secured personal loan?

The word secured in the term secured personal loan refers to a valuable asset that you offer to the lender as a guarantee that you will pay your loan off successfully. If you fail to pay your loan off, the lender has the right to repossess the asset youve put up. For this reason, a secured loan is seen as less of a risk for the lender because whatever happens theyll be able to recoup their investment. Interest rates on secured loans are therefore usually much lower than on unsecured loans.

Unsecured loans, by contrast, are based entirely on your personal credit. You are essentially asking your lender to provide you with financing because your credit history is proof enough that you are trustworthy. Because the risk in this scenario is shifted over to the lender, they will demand a higher interest to make the arrangement worth their while.

Is an unsecured personal loan right for me?

Unsecured loans mean its less likely youll lose a significant asset if you run into trouble with repayment . Elsewhere on this page we listed some reasons why an unsecured personal loan might be right for you, including debt consolidation, business expenses or unexpected emergencies. Ultimately, you should always make a thorough accounting of your own situation before you apply for any type of financing.

What credit score do you need for an unsecured personal loan?

And thats just about all she wrote!

What Loans Should You Avoid

Without question, its payday and car title loans.

Predatory in nature, payday loans come with absurdly high APRs that average 400% as well, borrowing amounts typically peak at $1,000.

• Payday loans also have significant rollover fees

If you find yourself in the unenviable position of defaulting on the loan, payday lenders usually allow you to rollover the loan and extend its due date. Youre required to pay both the original loan fee and a penalty fee for the late payment by rolling over the loan. On top of that, you still owe the principal balance as well.

• Another overlooked risk is bank overdraft fees

When a payment is charged to your checking account by the payday lender and your account doesnt have the funds to fulfill the entire transaction banks can charge overdraft fees that increase your costs that much more. The Consumer Financial Protection Bureau found that 20,000 bank account holders who made payments to online payday lenders incurred an average of $97 in overdraft and non-sufficient funds fees. The figure is nearly three times more than the $34 incurred by the average American.

• Now for car title loans

As a type of secured loan, car title loans require you to put up your car as collateral. If you fail to make the payments, your car can be seized in the process. Because of a questionable reputation, car title loans are actually illegal in many states.

• How else do car title loans cause financial harm?

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Unsecured Personal Loan: What Is It

When it comes to lending options there is a variety of solutions for you to select from. Getting small unsecured personal loans with bad credit or good credit means you request a certain amount of cash for several months or years and repay it gradually according to your repayment schedule and terms stated in the loan contract. You can find the template of the best money help or calculate the total sum depending on the creditor or credit union you opt for.

A personal unsecured loan is called so because it presents a lending decision issued to the borrower without any collateral. You dont need to have a certain status or demonstrate any guarantee to back the debt up. A small amount of cash is given to the clients without security although some creditors approve only good credit holders. Many people compare unsecured to a secured loan while the latter option doesnt demand an excellent rating.

Best For Relationship Rewards: Citibank

• Starting interest rate: 7.99%
• Minimum credit score: Not disclosed
• Loan terms: 12-60 months

Citibank is the best bank loan for relationship rewards due to its thank you points and other customer rewards.

• Relatively low annual income requirement

• Discount for Autopay

• Only available to qualifying Citibank customers

• No pre-qualification option

• Maximum/minimum amount you can borrow: $2,000 to $30,000
• : 7.99%23.99%
• Fees: No origination fee. Possible fees for late payments and returned payments.
• Minimum recommended credit score: Not disclosed by the company.
• Other qualification requirements: Must be U.S. citizen or Permanent Resident. Applicants will need an annual income of at least $10,500 and an eligible Citibank account open for 3 months.
• Repayment terms: 12 to 60 months
• Time to receive funds: Within 5 business days
• Restrictions: Loan funds are processed by check only. Applications for loan amounts greater than $30,000 must be made by phone . You may only have one additional Citi personal loan open at the time of application, and it must have been originated at least six months prior. Personal loans may not be used for education purposes.

Read the full review: Citibank Personal Loans

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Us Bank Premier Line Of Credit

You need to be a U.S. Bank customer to get the U.S. Bank line of credit, but there’s no minimum asset requirement. U.S. Bank makes it easy to access your funds: You can use checks, a Visa card, online transfers or, if you prefer a human touch, visit a branch. You can also use the Visa card at an ATM, but it will cost you.

Make A Complaint About Your Personal Loan

If you have a complaint related to your personal loan, you should contact your lender.

All federally regulated financial institutions, such as banks and federal credit unions, must have a complaint-handling procedure in place.

If your lender is regulated by a provincial or territorial government, such as alternative lenders and payday lenders, contact the regulator in your province or territory.

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Apply Online Or In Person

Eventually, you’ll settle on one personal loan. At that point, you can apply either online or at a bank branch. Applying online typically gives you the fastest decision, since it’s automated. But applying in-branch may plug you right into an automated system, too. And you’ll have the expertise of a banker with you.

When You Should Get A Personal Loan

The best reason to get a personal loan is to consolidate debt. As long as you get a favorable interest rate and make payments on time, youll be benefitting from the simplicity and lower payments of a single loan that takes the place of multiple credit cards or other loans with varying and higher APRs. Home repairs, such as termite extermination and leaking roofs, are also sensible reasons for personal loans, but you need to have a solid plan for repaying the debt.

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What Happens If I Default On An Unsecured Personal Loan

If you default on an unsecured personal loan, your credit score will take a major hit. Lenders might sell your debt to a third-party collection agency in an attempt to recover some of it, alert credit bureaus to the default or take you to court. These actions could negatively impact your credit for years.

Common Uses For Unsecured Personal Loans

Most financial experts advise against borrowing for discretionary purposes, like weddings or vacations, for which there can be less expensive options. At the same time, some people prefer the fixed payments and terms associated with personal loans.

Here are NerdWallets recommendations, based on what you plan to use the loan for.

Debt consolidation

Why choose an unsecured loan:Debt consolidation involves combining debt from multiple sources into a single monthly payment, ideally at a lower interest rate. Using a personal loan to consolidate means one payment over a fixed period, giving you an end date to work toward.

Home improvements

Why choose an unsecured loan: A home improvement loan is a good idea if you dont have a lot of equity in your home or want to avoid using your home to secure the loan. Unsecured home improvement loans typically have higher, fixed interest rates but shorter repayment terms than home equity loans and lines of credit.

Wedding

Why choose an unsecured loan: A personal loan for a wedding is a good option if youre going to borrow anyway and can get a lower rate than you would on a credit card. Because you borrow a set amount, youll also avoid the temptation of overspending.

Medical expenses

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