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Posts Tagged ‘Unsecured Loans’

They have often been referred to in not-so-kind terms as “loan sharks” and “predatory lenders”. But fortunately or unfortunately they exist because there is a need for them. We are talking about payday loan lenders.

Critics including lawmakers, while fast to rebuke payday loan companies, have not offered alternatives. Direct lender payday loans are meant for people facing financial hardship who often cannot get a loan from banks and similar financial institutions.

As long as no alternatives are created, and there are none in the horizon so far, this industry will continue to thrive. That is, if it is not outlawed, something some quarters would love to see happen.

Contrary to popular belief, these lenders are not just for people with bad credit. Granted, people with bad credit make the bulk of their customers as there is no credit check involved. But people with good credit too do take out these loans to avoid credit checks which affect credit scores.

Another aspect that draws people to direct lender payday loans is approval rate and speed. Approval is often in minutes. Though requirements differ from company to company, virtually anyone with a job, social security number and a bank account can get approved.

One of the first things to know is the difference between secured and unsecured loans. Secured loans require the pledge of collateral or a valuable asset such as real estate, stocks and bonds, or even a late model vehicle. In the case of default by the borrower, the collateral can be seized by the lender and sold to cover the cost of the loan.

Unsecured loans require no collateral. The only security regarding repayment the lender has is your signature and your promise. The lender will certainly research your ability to repay. The lender will want to know about your employment. How long have you worked for the company? What is your salary? What are your usual monthly obligations? How much money do you have left over after meeting those obligations? These are the questions you will be asked.

Good to Know Large Unsecured Loan Facts

Large unsecured loans can range from $1,000 to $25,000. The amount is largely dependent on your salary and your debt to income ratio. Repayment terms can range from six months to ten years depending on the amount advanced. Though long repayment terms can keep monthly payments low, money repaid in interest will be considerably more.

Many types of loans exist to fit the various needs of people in different financial situations. If you want to understand the qualifications for a loan approval, you need to examine the various types of loans available to you. The variety includes secured and unsecured loans and short term and long term repayment loans. These are not all that are available but they are the most common. Take a look at each.

Secured Loans

Collateral is the key word for secured loans. Collateral consists of value property put up to secure the amount of the loan. In other words, if you take out a secured loan, you will give the lender temporary ownership of your home, other real estate, stocks and bonds, or even a late model car. Should you default on the loan, the lender will have the right to seize the property and sell it to cover the cost of the loan. Since these loans are secured by valuable property, interest rates are usually lower and repayment terms can be more comfortable. Also, these loans can be rather large. These loans can have long or short term repayment terms, depending on the size of the loan and perhaps other factors.