Personal Loans - No Risk Loans

Written By Devi Kristanti on Saturday, August 2, 2014 | 8:54 PM

Personal loans in reality are an overpriced product packaged as the “best bet” when funds are running low. The first USP that the banks and other financial institutions never fail to highlight is the so called absence of collateral. In other words, borrowers apparently do not have to face the threat of repossession of property as there is no asset involved. But, if the loan seeker fails to repay the loan amount on time or if there are repeated missed payments, the lender through an injunction from the court can alter the loan type to a secured deal.

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That is, the earlier loan will be converted into a secured loan and your home might be repossessed in event of failure to pay the due amount on time. In case you don’t have any asset, the court may order your employer to deduct a certain amount from your monthly salary and put it directly in the lenders account.

In fact, taking a loan against collateral might actually be a good thing. At least it will reduce the interest rate. The interest rate associated with unsecured personal loans is truly atrocious. The official reason behind this is the so called “risk factor” that the lenders undertake in providing this type of loan. The typical APR rate is generally around 19.9%. But, in most cases, the APR (annual percentage rate) can range from 7.9% to 41%.

Lenders usually don’t have too many loan plans for unsecured personal loan [] deals. Unsecured personal loans do not offer any flexible repayment terms or interest plans. Its terms and conditions are quite stringent. Borrowers are hardly given any options to choose any particular repayment schemes.

The only thing that works in favour of unsecured personal loans is its quick processing time. If the lender is satisfied with your credit score, then the final documentation hardly takes any time. In fact, the loan can be sanctioned within 2-3 days of applying for the loan.

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