What is unsecured loans? Things to know about unsecured loans
Unsecured loans are a great way to solve personal spending problems. Therefore, it is essential to understand what unsecured loans are, the benefits and limitations of this form of loan.
What is unsecured loan?
Unsecured loans are a form of loan without collateral, based entirely on the reputation of the individual and the company working for personal purposes, which can be a wedding expense. , travel or consumer purchases, and very convenient loans to cater to all your needs.
Should unsecured loans?
The benefits of unsecured loans
Unsecured loans without collateral (the lender does not require any collateral), to get another loan you need to have collateral for the lender, for example, land use rights, savings books or cars ...
Simple application procedure: Customers provide personal documents at least, much simpler than a mortgage loan.
Regardless of the loan purpose: You do not need to disclose the details of the use of your loan, as long as it is for the purpose of a consumer loan, credit institutions are interested in liquidity. Your math more.
High loan amount: You easily get a fast loan with a large loan amount.
Limitations of unsecured loans
High interest rates
The biggest disadvantage of unsecured loans is the interest rate that is higher than normal loans. This is mainly aimed at limiting loan risk. In addition, partly to offset the costs of appraisal, capital ...
Penalty fee for early repayment
Next, if you pay your debt ahead of schedule, depending on the bank you will be charged a fee of 2% - 5% of the prepayment amount depending on the maturity date.
A few notes when unsecured loans
Calculation of solvency
Before receiving the loan you need to know exactly your monthly solvency, you need to know the amount of money will be accounted for in your monthly income and you can pay it and still live normally. The monthly payment should not exceed 40% of your total monthly income.
Pay attention to final settlement before due date
Banks will suffer losses if you pay your debt early, so banks often give a percentage of what you have to pay more if you make payments before maturity.
Understand the loan interest calculation correctly
Unsecured borrowers also need to understand the bank loan rates correctly. Banks often offer two ways of calculating interest rates: decreasing interest rates and fixed interest rates:
In the declining interest rate method, the amount payable for your loan interest rate will continue to decrease based on the reduced monthly principal, the principle is to be reduced monthly, quarterly or annually.
In the fixed rate method, the amount payable for your loan interest rate remains constant during the loan period, simply because this amount is calculated based on the original principal balance.
If there is no urgent need, it is best that you should not go to banks, financial companies to carry out a mortgage loan procedure because it is more or less the "disadvantage" part is always inclined towards. people borrow money
If you decide to borrow, you should carefully research, calculate the loan methods, find the right bank and be careful with the terms of the contract before officially signing the proposal. unsecured loans.