What Is an Unsecured Personal Loan?
When you need a little extra cash in a pinch, an unsecured personal loan can be a lifesaver. These loans provide added funds when you need to pay for a big purchase or pay off debt. Find out more about unsecured personal loans and what they’re good for.
Definition of an unsecured personal loan
An unsecured personal loan is a specific kind of personal loan which doesn’t require the use of collateral, which is an asset that a lender accepts to secure a loan. (For example, you might use your car as collateral when taking out a car loan; that means your lender can take your car if you don’t pay the loan.)
Instead, an unsecured personal loan relies on the borrower’s creditworthiness and other information, often reflected in their credit score. These loans are also sometimes called signature loans.
All personal loans are simply borrowed funds which you can use for nearly any purpose, such as:
- Home renovation or repair
- A vacation
- A wedding
- Unexpected expenses
- Debt consolidation
- Paying off credit cards
Unsecured personal loans don’t require you to put down your car or other property as collateral, and instead often require a higher credit score to qualify, since those scores often demonstrate a person’s ability to repay loans in a timely fashion.
If you’re wondering if a personal loan is secured or unsecured, consult the lender or the terms of the loan.
What kind of rates do unsecured personal loans have?
Since unsecured personal loans are secured by the borrower’s creditworthiness, they may have higher rates than secured personal loans. This is to protect the lender’s interests if the borrower defaults on the loan. However, borrowers with good to excellent credit scores may find they enjoy access to great unsecured personal loan rates thanks to their stellar credit history.
When you’re considering an unsecured personal loan, check out the interest rate, which you can find when comparing loans and loan terms. The interest rate you qualify for will affect the total cost of the loan: not just the principal amount you borrow but the total you will owe by the end. Make sure the interest you will pay is an amount you can afford. You can use our payment calculator to estimate your loan payments and see what your monthly cost might be.
Some unsecured personal loans will also charge you fees to apply. Consumers National Bank never charges fees to apply for a personal loan.
Where can you find personal unsecured loan lenders?
When looking for an unsecured personal loan bank to finance your loan, consider a few criteria. The bank you choose should be convenient, reputable, and offer excellent customer service. You could also try an unsecured personal loan broker, if you’d like someone to help you find just the right lender.
For example, take Consumers National Bank: We offer competitive rates on unsecured personal loans with personalized service from our in-branch lenders. You’ll receive a customized payment plan tailored to your needs as well as your budget, and you’ll enjoy quick approval, since our lenders and loan processors are local. We provide loans up to $10,000 and terms up to 84 months, so you’re sure to find terms that work for your situation.
We also offer both installment personal unsecured loans and our Consumers Reserve Personal Line of Credit, which is an unsecured personal loan linked to your checking account. Simply write a check when you need a little extra cash and pay it off without a prepayment penalty.
You can even apply online for a personal unsecured loan with Consumers National Bank, and the application process only takes 15 minutes. We can notify you of approval in as soon as one business day.
Don’t miss our other loan products as well—at Consumers National Bank, we’re dedicated to providing you with a wide range of products to meet your needs, including mortgage loans and recreation loans, too. Call us or stop by today.