The Little Known Benefits of Unsecured Personal Loans

Learn from personal finance experts on what perks personal loans may offer, such as fast funding, soft credit checks and no pre-payment penalties.

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By Ben Harper

Unsecured personal loans are easy to obtain in a short amount of time. There’s no pile of paperwork or hoops to jump through. You apply for the loan online and have an answer in minutes. Choose your offer and you’ll have your funds with a few days.

But, getting funded fast isn’t the only benefit unsecured personal loans offer. Unsecured personal loans offer many other benefits too. Check them out below.

There’s no Collateral

You don’t have to put up your home, car, or any other asset as collateral. Your financial reputation is what gets you the loan – it has nothing to do with your assets. If you default, no one will threaten your home or car. Of course, late payments affect your credit score and ability to get future credit, but you don’t have to worry about losing your personal assets if financial troubles hit.

The Process is Fast

Unlike a home equity loan, you don’t have to jump through major hoops to get your unsecured personal loan. There’s no collateral to trace the chain of title or appraisal to determine a value. As long as you provide proof of your financial ability to afford the loan, the process goes quickly and values and liens won’t hold you back.

You Can Use the Funds as you See Fit

We won’t tell you how to use your unsecured loan funds. Pay off credit cards, improve your home, pay medical bills, or take a vacation – we won’t say a word! Many people take out unsecured personal loans for emergency expenses or just to have ready in the case of an emergency.

Personal Loans Have a Variety of Terms

Unsecured personal loans come in a variety of sizes and terms. Borrow the amount you need (and qualify for) with repayment terms that make it the most affordable.

Choose from short-term loans starting at just 12 months to longer terms of up to 84 months. If you need slightly more affordability in your payment, choosing the longer term will help lower your payment.

Personal Loans Can Help Your Credit Score

It may sound crazy, but a personal loan may help increase your credit score.

First, it provides you with a good ‘credit mix.’

For example, if you have all credit card debt at the moment, your score may suffer. If you add in a personal loan (installment loan), it mixes up the type of credit which helps increase your score.

If you use your personal loan to consolidate debt, your score may improve as well. Decreasing your utilization rate (amount of outstanding debt compared to your credit lines) helps your score increase.

Unsecured personal loans may help your financial life in many ways. Whether you just need the funds handy or you have a specific purpose for them, the funds can help you achieve your goals.

With a short approval and funding time, an unsecured personal loan is a great way to get funds you need without putting your assets at risk.

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Ben Harper

Ben is a personal finance writer with SimpleDirect, where he focuses on topics such as personal loans, credit cards, and offering financing.

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