A starters guide to unsecured personal loans
If you have a bad credit rating you may be concerned about your ability to get a personal loan. We’re here to tell you that just because your credit rating may not be amazing you can still get personal loans. They are quite easy to apply for too. In this article, we are going to try and to give you a starting guide to unsecured personal loans and how to go about applying for our lender-finding service.
What is an unsecured personal loan?
Unsecured loans are a type of personal loans. They are unsecured because they don’t require an asset as collateral or security to be tied to the loan. Some other examples of unsecured loans are credit cards or student loans.
Lenders like to look at a person’s creditworthiness before lending an unsecured loan to check whether you are risky investment or not. We cannot guarantee that the lenders will offer unsecured personal loans no credit check, however, most of the lenders we find can dig deeper by looking at your current relationship with money.
What is the difference between a secured and an unsecured loan?
In contrast to unsecured loans, secured loans require an asset to be tied to the loan. This could be property, a vehicle or a boat for example.
Ultimately, they act as a security for investors in case something were to go wrong and you were unable to continue making the loan repayments for whatever reason. Though, if the borrower can’t make the repayments, the lender has the right to repossess the asset. Finally, secured loans usually have lower fees than unsecured personal loans.
Unsecured personal loans, whilst not requiring borrowers to put up an asset as collateral in case they default on the loan, may carry slightly higher fees.
|Secured Loans||Unsecured Loans|
|Tied to an asset||Requires no asset as security|
|Lower fees||Higher fees|
|Easier to obtain||Harder to get as it’s based on creditworthiness|
How do you apply for unsecured personal loans?
Applying online is the easiest way to get started on a personal loan application. Scroll up and fill out our application form. In addition, as a part of your application, you will also need to provide some details which include:
- 100 points of ID
- Payslips or bank statements showing regular income for the past 90 days
- Contact number and email address
Once you fill out the online application form and provide the supporting details we will get to work finding a lender that can offer unsecured personal loans.
What can you use unsecured personal loans for?
Unsecured personal loans are useful for many different situations. They come in handy when you need to pay for something in short notice, and don’t have the funds available to do so.
Personal loans could be used to pay for things like:
- Car repairs, or car registrations
- Household items and furniture
- Travel expenses
- Utility bills
- Wedding costs
- School fees
- Medical or dental
As you can see, unsecured personal loans are convenient in many situations.
What are the costs of an unsecured interest loan?
For smaller loans, that is, amounts of less than $2,000 – interest rates are capped to a certain amount. Creditors are not allowed to charge more than a 20% establishment fee and a 4% monthly fee.
They are allowed to charge default fees if you miss repayments, and enforcement expenses if you have to go to court and the creditor needs to get money from you. Though if you do fall into debt the maximum a lender can charge you is 200% (or double) the loan amount.
For loan amounts between $2,001 and $4,600, there is a maximum of $400 for a once-off fee and a maximum annual interest of 48% per year.
For loan amounts over $5,000, there is an annual percentage rate of 21.24%.
These costs are only an example, all costs are subject to each individual lender.
To find out more about unsecured personal loan interest rates visit: https://www.moneysmart.gov.au/borrowing-and-credit/other-types-of-credit/personal-loans/
How much can you get for a personal loan?
With unsecured personal loans, you can borrow between $1,000 to $2,000 repaid over a period from 3 months to 12 months, depending on the amount you choose to borrow.
Can you refinance a personal loan?
Unfortunately, you can’t refinance a personal loan. You need to first pay off your current loan before you are able to take out another personal loan.
Can I get an unsecured personal loan with bad credit?
You can still get unsecured personal loans with bad credit. Depending on which lender you choose to borrow from, you will still be able to borrow money without requiring a credit check.
How do you check your credit rating?
It’s always a good idea to check your credit rating and know exactly what your credit score is, especially if you are considering unsecured personal loans. You may know that your credit is not great, but it’s worth checking out anyway because it may be better than you think.
To check your credit score there are a few websites you can visit that will tell you what your score is for free.
How do you improve your credit rating?
If you would like to improve your credit rating here is a list of tips that will help. If done consistently over time, you could start to see your credit score rise.
- Check credit report, make sure there are no errors
- Make payments on time. It includes any bills or debt repayments.
- Reduce your debt
- Keep credit card balances low and repay them in full at the end of each month.
- Limit credit inquiries, as for every credit enquiry you make it gets recorded on your credit report.
- Do all of these things over time, because the length of time you have been using credit positively may affect your credit score.
What should you watch out for with unsecured personal loans?
Unsecured personal loans are still loans, and the most important thing to remember when borrowing money is to make sure you borrow what you can afford. If you don’t factor in the repayment amounts into your budget, you could risk falling into financial trouble. Not only could it affect your credit score but it could affect your mental and emotional well-being.
Budgeting helps you to avoid defaulting on payments and incurring expensive penalty fees. Thus, before taking out an unsecured personal loan you should always take some time to consider whether it really is the right option for you.
Who is eligible for our lender-finding service?
Good question! To apply for our service, you must check off a few requirements:
- Must be over 18 years old
- Be an Australian citizen or permanent resident
- Be receiving a regular income for at least 3 months
- Have an active mobile number and email address
To sum up, applying for unsecured personal loans are quite easy and can help you out in situations where unexpected expenses occur. They don’t need to be secured with an asset and the application is 100% online. Outcomes are fast too. So, if you need an unsecured personal loan, apply for one today here.