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The gig economy has been tough all over and has helped foster historic levels of income inequality in the US. This has led to many people looking for cash flow solutions on a regular basis, such as unsecured personal loans.
What are unsecured personal loans?
Unsecured personal loans are loans based on income. In other words, they aren’t tied to some kind of collateral.
Common forms of loans tied to collateral include car loans and home mortgages. If you can’t make payments, the bank will take possession of the car or house to help satisfy your financial obligation to them.
You sometimes see such loans called signature loans. The idea is that you just sign for them and the bank largely takes your word for it that you will pay it back.
How does an Unsecured Loan Works?
Unsecured loans are just like any other type of loan that you might apply for. You will need to fill out some paperwork, and then you will submit it electronically or print it out and mail it in.
The Lender will review your application. If you’re approved, the funds can be deposited directly into your bank account or by check if you prefer to avoid using your debit card or checking account. Upon approval, the unsecured personal loan is available immediately, so there’s no need for a long-term commitment from the lender.
Income requirements vary from one lender to another. You will need to show that you have regular income in order to qualify for this type of loan. Most lenders will ask that you show at least two sources of income in order to further secure the loan. This can include a paycheck, social security, unemployment benefits, pensions, or rental income.
As with any type of loan, interest rates are what you need to focus on. They are the amount charged over the course of time for using the money. It’s important to consider whether or not this is worth it in light of your situation. For example, many lenders charge between 3% and 18% interest rates on unsecured loans.
Types of Unsecured Loans
Unsecured loans can be found for a wide range of different uses and circumstances, and this can make them a lot trickier to evaluate and compare. The most common types of unsecured loans include:
- Personal Loans – This is what many people think of when they think of an unsecured personal loan. This type of loan allows the borrowing contractor to receive money from a lender after meeting income requirements. Some lenders will require you to show proof of income, such as checking account balance or payroll checks (from your employer). Others will use your credit report or credit score as part of their assessment to determine how much you can borrow. This is what many people think of when they think of an unsecured personal loan. This type of loan allows the borrowing contractor to receive money from a lender after meeting income requirements. Some lenders will require you to show proof of income, such as checking account balance or payroll checks (from your employer). Others will use your credit report or credit score as part of their assessment to determine how much you can borrow.
- Signature Loans – These are secured loans that defer payment until the next payday while still requiring you to provide proof of income. The borrower will need to provide the lender with a signed authorization card, which will allow them to take possession of any checks or cash sent by the borrower before they are deposited into their bank account. These are secured loans that defer payment until the next payday while still requiring you to provide proof of income. The borrower will need to provide the lender with a signed authorization card, which will allow them to take possession of any checks or cash sent by the borrower before they are deposited into their bank account.
- Education Loans – Unsecured educational loans are available for education financing, which does not require collateral in order to be approved for financing. These loans can be taken out by students or parents in order to pay for undergraduate college expenses, graduate school expenses, vocational/technical schools, and independent study courses.
Common uses for unsecured personal loans
Unsecured loans can be a great option for many people when they need to pay for something in a hurry. They can be especially convenient when you need to pay for an emergency or unexpected expense. For example, you might need money in order to make repairs to your home, replace a broken appliance, or cover other costs. In this case, an unsecured loan would be a great solution that also offers you flexibility in terms of timing and repayment.
However, it is important that you consider the interest rates charged before taking out a loan of any kind. This will help ensure that you’re not paying more than necessary on your debt every single month.
Common uses for unsecured personal loans include:
- Home repairs, remodeling, or improvements.
- Medical bills or health care expenses.
- Tires, car stereo equipment, or other car expenses.
- Computer equipment, software, cell phones, and tablets. Also laptop computers. Entertainment systems are also included.
How do I apply for an unsecured personal loan?
One reason that no collateral loans are popular is that they don’t involve a lot of paperwork. In many cases, all you need to do is supply some basic personal information and give them some financial details.
Typically, they want to know your name, address, phone number, and how much money you make. A copy of ID and papers showing your income may be all the documentation you need to support your written application. Here are some common forms of acceptable ID;
- Driver’s license.
- State issued ID card.
- Tribal ID card.
- Military ID card.
- College ID card.
For financial paperwork, it’s common to provide a copy of a recent bank statement showing deposits. It needs to be recent to show that this is current income. They don’t care how much you made last year. They care how much you made last month.
It’s really not anything strange.
Financial terms can get hard to understand and confusing, but don’t stress. You may have gotten one before by a different name.
The most common form of unsecured personal loan is an easy payday loan. But people often don’t think payday loans are the same thing.
People can have a bit of a mental block about such things. They think that thing they did at a little brick-and-mortar place is somehow completely different from the kind of loan you get with an online application. But the difference is mostly in how the application is delivered and how the funds are dispersed.
Apply Now For An Unsecured Personal Loan at TheGuaranteedLoans
You can find unsecured personal loans and other loans right here. TheGuaranteedLoans is a clearinghouse that helps connect lenders to customers.
We do the legwork for you to help save you time and hassle. We gather together information on a variety of available loan products. You fill out a single application and we check it against our in-house data to find you the best match available.
FAQ
Some lenders will report the debt to the credit bureaus, but all unsecured loans report remain on your credit report for seven years from the date of loan origination. In addition, it is possible to disestablish a credit account in this time frame.
Unsecured loans are considered to be a higher risk for lenders. Therefore the penalty for repayment default may be higher compared to other types of loans. However, if you can show you are able to afford the monthly payments based on your income. The lender will likely not pursue legal action. However, there are exceptions.
It’s possible that an unsecured loan could take your house. However, if you have a secured loan or have cash in a traditional bank account, this is unlikely. For example, if you have a car loan, the car would be repossessed, and you would use the bank accounts to pay off the rest of your debt.
People often refer to unsecured personal loans as “cash advances.” These types of loans can come with just as many risks as their secured counterparts, plus they do little to increase your credit score. Also, they don’t offer much in terms of flexibility in repayment schedules.
In some circumstances, yes. If you have an actual business under the IRS guidelines, then you may be able to write off a large portion of your debt as a small business expense if you make a profit over the course of a year. The IRS also allows for two years of tax write-offs for medical expenses.