Basically, unsecured loans are money lent without collateral in exchange. This is more common because more people are attracted to the benefits and are willing to give up the disadvantages because the advantages are solutions to the borrower’s problems. Most borrowers need money right now or in the immediate future (like within 3 days to a week). While food should not be a problem since you can always find a way to eat, oftentimes the lifestyle of a person holds one’s pride and comfort with almost no room for adjustment to sacrifice a few times of discomfort for not so palatable meals. Rather, you will try to find someone who can offer you unsecured loans.
Why is it hooking borrowers? First, the speed of approval is a lot faster than the secured ones. Many can have the loans released within 24 hours but only if there is no problem with your credit score. If you have a clean record or you are known to be paying on time, you will most likely be approved easily. Another advantage is the collateral issue (which is why it is called unsecured). You do not have to give in the title of your house, car or whatever solid asset that can be accepted by the lender. This is especially a relief when you really do not own anything of real value according to the lender’s standards. In line with that, there is little paperwork done since you do not need to send your land title or whatever that you send as collateral.
There are a few disadvantages, as mentioned above, but given the advantages, they weigh less. The interest rate is higher. There is a certain standard for interest rates so you can be quite sure that you are not overcharged. There are other lenders, though, that can serve you for a lesser rate so it is advisable to look around before deciding to push through with a particular lender. You cannot also expect high amounts to be released without collateral so basically you can have enough for immediate needs, even for a short vacation or tour or minor construction repairs. You cannot also lengthen the duration of your loan more than five years. That is as long as it can get. The longer it takes you to pay, the more the lender earns from you. When applying, make sure that your monthly payment is fixed so that you will not be affected by whatever economic conditions that may happen in the future.