In simple terms unsecured loans are those that are provided without any collateral. Thus these are sometimes called as good-faith loans. It is obvious that an individual has to pay higher interest rate for such a loan. Moreover, you need to have good credit in order to
get an unsecured loan approved from the bank. This post explains what is unsecured loan and how to avail it.
get an unsecured loan approved from the bank. This post explains what is unsecured loan and how to avail it.
Differences between a Secured loan and Unsecured Loan
As the name suggests, a secured loan is one that is secured with some collateral. If the borrower does not pay back the loan instalments, the collateral is taken by the bank. On the other hand, there is no need of any security in case of unsecured loan. However, you will be asked about your income sources. If you do not have a stable and good paying job, it would be hard for you to get the loan approved. The unsecured loans can be helpful in case of an emergency but do check the interest rate and think before applying. It is a common situation where the borrower is not able to cope with high interest rates and is forced to take a new loan in order to pay back the earlier one.
How to Get an Unsecured Loan
Getting an unsecured loan in Singapore is much harder in comparison to a secured loan. Most of the banks will do a credit check to confirm that you have a good history of paying back the debts. You can apply for the loan through the internet or by visiting the nearest branch of the bank you choose. You will be asked to submit various documents like salary slip and other proofs of income. Once your loan is approved, you are provided the loan amount in the bank account you provided at the time of applying for the loan.
Precautions while taking an unsecured loan
You also need to be careful while taking an unsecured loan. Firstly, like any other type of loan, you should check the reputation and history of the loan provider. No doubt, there are a number of reputable and trusted loan providers in Singapore, but some lenders also try to exploit common people. These lenders will hide certain rules or extra charges from you. In order to screen out such schemes, you should check the reviews of the loan providers in your area. Another option is to ask your colleagues or friends about their past experience and tell them to suggest you a professional loan provider. Again, you should think properly before taking the loan. Just because you need not give any collateral for an unsecured loan, it makes no sense to take a loan for unnecessary things. If necessary take that much loan which you can repay easily.
You must consider the interest to be paid and the time frame in mind too. If you fail to repay the loan later, your credit rating will become worse. This will affect your financial condition for years and you might not be able to take any loan in future.
