Looking for unsecured personal loans? We’ll help you find one to suit your pocket.
Unsecured personal loans are a great option if you don’t own any valuable assets. If you’re looking for a loan, but don’t know which one is best suited for you, it’s worth looking into unsecured personal loans.
What is an unsecured personal loan?
Unsecured personal loans are loans where your credit rating and personal history are used as the basis for you obtaining the loan. This means that you don’t put your assets up for security on the loan. If you are the type of person who doesn’t own many, or any, valuable assets (e.g. car, house, boat etc.) then this type of loan might be your best option.
What is the difference between a secured and an unsecured loan?
You might be wondering what the differences between secured personal loans and unsecured personal loans are. Here’s how secured and unsecured personal loans are different: (https://www.moneysmart.gov.au/media/269016/personal-loans.pdf)
| Secured Personal Loans | Unsecured Personal Loans |
| You put up assets as collateral | The loan is based on your ability to repay the amount |
| If you fail to repay, the lender can sell the asset to get their money back | If you fail to repay, the lender can take you to court |
| Easier to qualify for due to it being less risky for the lender | Harder to qualify for since you have to convince the lender that you are not a risk for them |
Depending on what your personal situation is, unsecured personal loans may be a better option for you. If you are limited with what assets you own, this may be the loan that best suits you. You might live in the city and therefore owning a car or house isn’t a good option for you, or you might have just moved to a new town and need some money fast. Whatever your circumstances, if you do not have assets that you can put up for collateral, an unsecured personal loan may be the right fit for you. Unsecured loans are typically small with short commitment terms, so perfect for anyone looking for flexible cash.
Some terminology that you need to know when looking into interest rates is APR. APR, or Annual Percentage Rate, is the amount of simple interest that can be earned in one year. Simple interest means it’s not compounding. Lenders have to tell you what their APR is, so instead of being confused by wording you now know exactly what it is.
According to Australian Legislation passed in 2013, lenders are now limited on what interest rate they can charge you. The amount that you borrow will affect your interest rate. (https://www.moneysmart.gov.au/borrowing-and-credit/other-types-of-credit/personal-loans).
No time to do comparisons? You could also apply with us, and we’ll find a lender who can offer you the loan you need.
How much can you get for a personal loan?
Personal loans differ from your mortgages, business loans and your car loans. Because of this, the amount that you can borrow therefore differs.
Most lenders offer between $200 and $10,000 for personal loans. Some lenders will differ and because you are applying for an unsecured personal loan the amount may be smaller again. On average though, a small personal loan is normally between $500 and $2,000.
Personal loans under $2,000 are typically considered unsecured personal loans. And they can be perfect when you need a quick fix to cover some unexpected bills!
Can you refinance a personal loan?
Whether you are eligible for refinancing your personal loan may not be a question that’s crossed your mind, but it’s an important one nonetheless. It’ll be a question of who your lender is that will determine what your options are.
Some lenders may require your loan to be paid off in full before allowing you to apply for a new larger loan. This new loan would still be subject to the various criteria and assessments; however, this is a way some lenders let you ‘refinance’. Other lenders may let you refinance but it would be part of a debt consolidation loan.
In general, though, personal loans typically have to paid off in full. However, you can reapply soon afterwards.
What’s important when applying for an unsecured personal loan?
An unsecured loan might be your best option when obtaining a personal loan. However, you’re probably wondering what’s important to showcase when applying for one of these loans.
Obtaining an unsecured personal loan isn’t an easy task. You have to search through hundreds of lenders to find the perfect one, or you could simply apply for us, and we’ll do our best to find you a lender. The best things to prepare before applying your application are:
- Your financial documents – You want to convince the lender that you are a safe bet for them. Therefore, you need to show your recent pay slips and bank statements. You need to show that you have a history of savings and that you don’t blow your paycheck every week. Therefore, collect and collate your financial documents so that you can show you are a suitable candidate for a loan.
- A budget – To show that you are serious about getting a loan, prepare a budget. This shows the lender that you are committed and have a plan in place on how to repay them. Because the loan isn’t secured by an asset they are more reliant on how you manage your finances. Therefore, by showing that you have a plan in place, it helps prove that you are a good applicant for the loan.
- A guarantor (if applicable) – Depending on your situation and the loan you are applying for, looking into a guarantor is a possible option. A guarantor is someone who acts as a backup in case you can’t pay the loan back. It’s a serious obligation for someone to undertake and therefore you should consider very carefully who you want to ask and whether to ask at all.
You might not have any sizeable assets and therefore are wondering what type of loan can you get. Unsecured personal loans are your best option. You will have to convince your lender that you are a safe option, however, you won’t have to put up that collateral which for various reasons you lack.