Personal loans are taken out by individuals for ‘personal’ reasons like upgrading their house, preparing a wedding fun, or planning a vacation, for example. Consumer loans are meant for personal reasons by borrowing money from lenders. You can find other types, including mortgages, refinances, home equity lines of credit, auto loans, student loans, and finally personal loans. Personal Loans can either be secured and unsecured loans. 

Before the term scares you, you need to understand that this means there is no collateral asset that the bank could use to ascertain that they aren’t risking their money. This is why a lot of financial checks and risk-assessment practices are done by the bank to ensure the lowest risk possible. Other than personal loans, you might find that payday loans, title loans, home equity loans, or credit card cash loans might suit you better.

The financial institution that usually does the lending is a bank; yet, it’s not exclusive due to the availability of a lot of different financial organizations that can provide loans to individuals. Sometimes, these organizations can even offer loans at better terms.

To understand whether these types of loans will meet your needs or not, you need to become fully aware of the highs and lows of getting a consumer loan.

The Highs

You Don’t Have To Worry About Your Personal Property

Unsecured personal loans put your mind at ease when it comes to your personal property. You will be sure that it’s not at any risk with most lenders. If you are living in Norway, rest assured that you will find a same day consumer loan for foreigners who have been living there for several years. You can get a flexible consumer loan from 5,000 and up to 500,000 NOK with competitive conditions. But before deciding on making any move, you need to understand the different types that are available for you to be able to know for sure the right loan that will suit your needs.

Easier Application Process

The availability of different lenders’ types from banks, credit unions, or other organizations makes the process of finding the right lender for you. Even the process of getting an unsecured personal loan is a lot easier. Some lenders offer the option of getting your loan online at the comfort of your own house.

It Might Only Take 24 Hours

Unsecured loans have more flexibility than other loans when it comes to the factor that affects your approval. You will find many lenders that offer an immediate response. Unlike other types of loans, with unsecured ones, it’s possible to get the approval within 24 hours from the time you applied at. If you need funds quickly, these types of loans will suit your needs more than any other type of loan. However, you have to calculate the lows of getting an unsecured loan.

The Lows:

Loan Amount Might Be Smaller

It’s not surprising that lenders do their job to get money by charging interest on loans. They go to great lengths to secure their rights by getting repaid. It’s logical that most lenders will do their best to limit the risk of potential borrowers’ default. One of the most popular move that many lenders might follow to secure their money is limiting the amount of money of the loan. This mostly applies to people who want personal loans without any collateral and other people with a low credit score.

Rates And Payments Might Be Higher

Since lenders have already taken their risks in offering money at a higher risk for loans that aren’t secured by property, they need to take their measures in securing their money. Many lenders determine the rates based on your credit score and the loan amount that you want to borrow. That’s why it comes as no surprise that unsecured loans might come with higher interest rates than secured ones. If you are not sure, you need to ask your lender first to provide you with all the details. This way, you can make sure that the amount of your monthly payments is within your budget. Make sure to also ask about late payment fees, upfront fees, and if there are application fees to be aware of the whole situation before making your decision.

Some people might view unsecured personal loans as their saviors, and others might feel that the higher rates and payment or the amount of money aren’t convincing enough for them. The final word differs from one person to the other. If you need quick money without a headache, then unsecured consumer loans are definitely for you. If you need higher amounts of money, then you might find secured loans to be more suitable for your case.