Unsecured loan or cash advance is a small loan which you can take any time. It is one of the two most popular options for short-term lending that people can avail of, the other one being payday loans. You don’t need a credit worthiness tag to apply for an unsecured loan. Your bank will advance you the cash or a lending agency will, sometimes on the with a guarantor standing on your behalf in case of default. Such loans are repaid in monthly instalments.They carry very high interest rates, especially payday loans. Unsecured loans are not so bad, with APR less than 50%. The amount lent varies from lender to lender, but doesn’t go more than a few thousand pounds. Unsecured loans are the last to be repaid, only after any other charges on the account are paid. Unsecured loans are not secured by any asset like a home or car. It is based on the assessment of a panel of lenders who will help you to find the best loan for your requirement. Companies offer a range of loans like this, secured or unsecured, depending on your requirement.Different lenders charge different APRs, which they must display on their advertisements as representative APRs, which include all other charges with the interest amount. They charge differently based on customer profiles, their credit rating and the lender’s policy of course. Hence APRs can range from single digits to the 90s.Some FAQs on Unsecured Loans… Can I face legal action if I do not repay a loan?Unsecured loans are perfectly legal and you can face legal action if you don’t repay, even though there are no guarantors or assets linked to your loanWhat are the advantages and disadvantages of unsecured loans?The advantages are that they are easy to get should you need a large amount of cash in a hurry. There are no questions asked and payment terms are flexible from one to five years. There is no pre-payment penalty, and some loans give a repayment holiday period for the first few months after the loan is taken.The main disadvantage is that it is an expensive loan to pay back.Who is the best candidate for an unsecured loan?Though it is not considered a critical factor, a good credit history makes for a good candidate for unsecured loans. If it is a bank providing this loan, an account holder is a good candidate. A longtime resident of the place with a secure job is also a good candidate. So while granting the loans, the lenders consider those candidates as best candidates who can repay their loans in a short period of time because of their secure job and impeccable credit history.Is the interest (APR) flexible? How is it calculated?The interest rate on an unsecured loan is calculated depending on the following factors:1. The amount borrowed – the interest rate is inversely proportional to the amount borrowed usually. If large amount is taken as loan, then the interest rate will be less while the interest rate will be high for a small amount of loan2. The term of the loan – long term loans have higher rates while short term loans which can be repaid within a short period of time has low rates of interest3. The borrower’s credit history – a good credit history will get you lower rates. But if your credit history is not impeccable or you had defaulted in past then you will have to pay high rates of interest.What is the maximum term for such loans?The maximum term of unsecured loans is usually five years.
What would any of us give to get our hands on $50,000? With financial pressures bearing down on us, between car loan and personal loan repayments, credit card debt and outstanding bills to pay, that kind of cash could take care of a lot of our worries. So, little doubt then that a $50,000 unsecured loan could be the ideal answer to financial problems.The problem, of course, is getting approval on such large unsecured personal loans. But even though lenders are quite cautious about lending to those without any collateral, it is important to know that it is far from impossible to get approval on such a large sum. After all, all that lenders are concerned about is getting their money back, so convincing them this is the case is typically enough.Getting a $50,000 personal loan approved without security is quite a straightforward thing to do, with an application requiring some basic facts to convince the lender that the borrower can be trusted.Why Unsecured?It might be strange that someone would seek an unsecured loan that is so large, despite being in a difficult financial situation. The fact is that $50,000 unsecured loans might be the only option, since the applicant might not have any possession matching that value to use as collateralLenders understand this, as well as the fact that if they turn down every applicant on the grounds of having no collateral, they would miss out on a lot of business. What is required then is proof that such a large unsecured personal loan can actually be repaid. This basically means that the income is shown to be enough to handle the obligations.Of course, secured loans are always easier to get, and without any collateral to hand, a cosigner can provide the kind of assurance that lenders are looking for. With a cosigner guaranteeing repayments will be made, a $50,000 personal loan approved without security is far more likely.Loan Terms To ExpectThe realities of taking on a $50,000 unsecured loan are important to take into account before even applying for one. The fact is that interest rates, and other loan specifics, are unlikely to be ideal. However, when the need for this loan is high, such compromises are necessary.The interest rate is higher than that of secured loans, basically to compensate the lender for the perceived increase in risk that they are taking on. Without collateral, there is nothing from which the lender can recover any losses should the loan be defaulted upon. And with a large unsecured personal loan, the loss can be quite high.It is understandable too that the repayment schedule will be quite strict, and delays in making a repayment can prompt heavy penalties. It is essential that the right calculations are made before looking to get a $50,000 personal loan approved without security.The BenefitsStill, there are clear benefits to taking on a $50,000 unsecured loans, despite the high rate of interest and strict penalties. The sum is substantial so can serve to clear considerable debt. Perhaps $15,000 remains on an auto loan, $5,000 on a personal loan and another $20,000 in total credit card debts.A large unsecured personal loan can then clear these debts, and leave some over to handle due household bills and other expenses. However, the benefits can only be enjoyed if the repayments on a $50,000 personal loan approved without security are lower than the total monthly payments of the existing debts.Only then will the whole investment be worthwhile, and a $50,000 unsecured loan prove to be a wise option. Otherwise, it may only lead to a worse financial situation.