Different Varieties of Unsecured Loans

by John Stevenson on February 15, 2014

There are different types of unsecured debt, depending on your requirements and bank of choice. Financial institutions normally run a credit check and request additional documents such as proof of income.

Both brick-and-mortar financial institutions and non-bank lenders offer financing. Borrowers apply for unsecured loans to pay medical and hospital bills, tuition expenses, and others. Other types of unsecured debt include guarantor and payday loans, term deposits, and medical bills. You may need a cosigner if you have a low income or a history of missed or late payments. They are usually offered to persons with poor credit or little credit exposure and are considered an alternative to payday lenders. There are other options for borrowers with poor credit and stable income, one being payday lenders. It is not the best option because some lenders offer outrageous interest rates.

stampAnother example are student loans that are an option for persons who do not qualify for other types of aid. They can choose from different types of financial assistance, including grants, scholarships, and government and private loans. Students from low income families often apply for financial aid and are offered lower interest rates. Car financing is offered to customers who seek to purchase a vehicle. The type of loan determines whether you apply with a bank or non-bank lender. You may want to check with the manufacturer for rebates before you apply for a loan. The main benefits for borrowers are no application fees, easy approval, and affordable monthly payments. What you need to apply is your recent pay stubs, the vehicle identification number, your ID, and other documents, depending on the financial institution. Try to find a cooperative and fair dealer. Banks look at different factors to make a decision, including your cash flow, type of loan you apply for, and credit history. They offer affordable monthly payments and flexible solutions to creditworthy customers.

You must be of the age of majority to qualify for a bad credit unsecured loan. For banks, the main factor that determines the interest rate is your credit score. Credit unions usually offer affordable interest rates to their members. The loan amount is smaller compared to secured debt, and the term is shorter. The main benefit of short-term loans is that you pay less in interest charges but the monthly payments are higher. List all outstanding balances, including secured and unsecured loans. They are also interested in whether you are a salaried employee or a self-employed individual. You may want to list additional income sources such as bonuses, commissions, second job, and others. There are other income sources such as welfare, life insurance proceeds, savings bonds, and so on. Some sources of income are tax-free. You may want to improve your credit score first if you declared bankruptcy recently.

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