Though secured loans have the largest market share in the UK loan bazaar, recent studies indicate that the market for unsecured loans is on a steep rise due to its no collateral and quick approval attributes. Hence, they are becoming popular among all – tenants, homeowners, property owners and students.
1. Tenants and students: People who are unable to offer collateral because they do not own one (tenants) or are living with their parents
2. Homeowners and property owners: People who are unwilling to get into property related legalities or risk their property for a small amount .
Unsecured loans offer benefits that are absent in secured deals, like no collateral and no risks, less paperwork and quick service.
No collateral and no risks: Unlike secured loans, unsecured loans can be availed without pledging collateral against the loan amount. As a result, in the event of too many delays or defaults and non-payment, the lender does not get the right to take over the borrower’s asset or any other valuable(s).
Less paperwork and quick service: No collateral means, no time-consuming asset evaluation procedure. As a result, official formalities associated with the process of unsecured lending are less and that, in turn, speeds up the overall loan approval process.
The above-mentioned features make unsecured loans ideal for:
1. Small monetary requirements – when offering collateral may not be required
2. Urgent needs – when getting into lengthy property evaluation procedures may not be feasible .
If absence of collateral has benefits, it has drawbacks too. As the stakes are high for the lenders, unsecured loan seekers have to compromise with certain restrictions – limited amount, high APR, fixed payback terms and non-negotiable loan clauses.
Some of the most popular unsecured loan products available in the credit market are: bad credit loans, business loans, car loans, cosmetic surgery loans, debt consolidation loans, education loans, career development loans, holiday loans, homeowner loans, home improvement loans and wedding loans.
By: bernard john