Stating the Case For Unsecured Personal Loans
An unsecured personal loan is a loan that is not backed by any collateral from the borrower. It is made based solely on the faith and good credit standing of the borrower and nothing else, so people who are able to obtain this kind of loan do have excellent credit.
Flexible Borrowing Options
The terms of the loan usually include a fixed interest rate and the loan usually runs for 30, 60 or 90 days and then is renewable at the behest of the lender. This type of loan is usually done through a banking institution through a loan officer. A personal and unsecured loan is given many times in the form of a note which states the terms of the transaction. Interest is fixed for the term of the note, but can change, if and when the note is renewed.
The purpose of such a loan is used to establish further credit for the borrower and to further a banking relationship. The loan can be used for a number of different purposes, as well as the establishment of an emergency or opportunity fund for the borrower.
Check out this video for a little background information regarding the difference between fixed and variable interest rates.
Who Should Turn to an Unsecured Loan
Professionals and business people are the prime candidates for an unsecured personal loan as they use such a loan for various purposes such as a fund for the purchase of extra inventory for a business owner, if there is an opportunity to add to inventory if a really good bargain presents itself. Or an individual might use such a loan as bridge financing for a vehicle or a home, until a more permanent mode of financing is available.
In most cases the validity of an unsecured personal loan is also based upon the relationship that the borrower has with the banker, as when the banker gets to know the borrower more closely, there is a bond of trust that exists beyond the simple empirical nature of the transaction. It bears the stamp of duty and respect where the borrower feels that if he defaults in any way on the note, he will be letting down a friend, and that would not go well for his reputation.
An unsecured personal loan, or a note can be carried for years according to the borrowers needs and ability to pay the interest on the note. The bank looks upon the note with a good client as an investment, as they will possibly earn more interest over the long run than the amount of the note.
To find out more regarding the difference between unsecured and secured loans, please check out the following article - https://en.wikipedia.org/wiki/Unsecured_debt
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