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How Do Unsecured Loans Work and Can I Get One?

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21 FEBRUARY 2019

How Do Unsecured Loans Work and Can I Get One?

It sucks being short of cash. Whether you are struggling to pay your power bill, the car is being troublesome, or you have important renovations, being short of money can sting us. You’ve tried everything, but there is just not enough money to go around. Thankfully, unsecured personal cash loans are a great way to help you bridge your finances, helping you out where you need it most.

Today we’ll be exploring unsecured cash loans in depth, giving you the full scoop on what they can be used for. We’re committed to skipping all the jargon to provide an easy guide for understanding how unsecured loans can work for you and your finances. So, if you want to know more about unsecured loans, keep reading!

What exactly is an unsecured loan?

When it comes to lending, there’s a range of loan options that you can access. Typically, loans may be secured or unsecured.  A secured loan uses collateral – such as a house, boat, car or power tools – to ensure the borrower can get a loan. The most common secured loans are car loans or mortgages.

Conversely, an unsecured loan is when the borrower does not have to provide any collateral to obtain the loan.

An unsecured loan will typically be more flexible, giving you the cash, you need it, when you need it. However, they may have higher interest rates, and a lower max loan cap.

Our Express Loan is a great example of an unsecured loan. So, instead of using the value of collateral, such as power tools, we use your income and expenses in order to determine your loan amount, and what is affordable and comfortable for you to repay.

How do unsecured loans work?

Like all loans, when it comes to taking out a personal unsecured loan you will be expected to make repayments on a schedule agreed with the creditor (the organisation lending you money). Each repayment will be a portion of the loan amount, plus agreed interest. Your interest rate will depend on your own credit history, and the credit repayment terms (i.e. how long you intend to take your loan out for). Typically, a loan that is being repaid over a longer period of time may have a lower interest rate, but you will end up paying more in the long run.

You have to be reliable in meeting your repayment obligations with a personal loan – just like other debt in your life, like a mortgage or car repayment. Late fees may be incurred if you miss a repayment, or debt collection firm fees if the lender needs to recover the money that you have borrowed.

When is an unsecured loan useful?

Picture this: it’s the end of summer. You’ve had a great time travelling up the country, camping and holidaying with the family. But just as you drive home, the transmission locks up, refusing to shift out of park. This is an expensive repair – and you’ve just spent up on summer.

We’ve all been there – a situation where you need money, and there is none to be found. This is where unsecured loans can really help out. Whether it is a payday advance to help you feed the family, or money for urgent car repairs, an unsecured loan could be right for you.

What do I need to know before taking out an unsecured loan?

Like all loans, there are a set of criteria that we use to determine whether you are eligible for a loan. And, after all, everyone’s financial situation is unique.

At Superloans we are understanding – and we strive to create a loan repayment schedule that works for you. Typically, to obtain an express unsecured loan with Superloans, you will need to have documentation detailing your income and expenses, so we can discuss what is most suitable for you, based on your situation.

However, when it comes to taking out a loan, there are several things you should personally consider:

  • Can I afford to take on more debt?
  • If so, how much can I afford to borrow?
  • Will the personal loan solve any long-term issues with finance?
  • Is a personal loan right for me? Or are other types of loans better suited to my situation?

An important part of becoming financially stable and responsible is taking on debt mindfully. Unsecured personal loans can be a brilliant tool to help you consolidate debts, or pay down bills in order to avoid dishonour fees. However, it is important to examine your own financial situation and ask: what is right for me?

When it comes to personal loans, talk to the experts at Superloans

If you are considering taking out an unsecured loan to meet your financial obligations, contact Superloans today. Our friendly branches have teams that can take you through your options when it comes to personal loans, helping you find a solution that works for you.

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