Funding a project or paying for specific needs can lead to seeking out a loan. The problem that some individuals face is a lack of understanding about the appropriate type of loan. By understanding the facts about unsecured loans, it is easier to make realistic financial decisions.
1. Unsecured Loans Have Set Limitations
While it is true that most lenders will have a general limitation for maximum funding, it is not true that the limitations are always the same. The maximum loan amount for one individual at Clydesdale Bank will depend on the financial situation of that person. The maximum is set based on the ability to repay the debt and follow the repayment plan, which can vary between individuals.
2. Loans Are Processed Quickly
It is a fact that unsecured loans are naturally faster than secured options due to the lack of security. Although it is a fact that the loans are relatively fast, the speed will depend on the loan amount and the type of loan requested. In some cases, it can take a few days to process an unsecured loan.
3. Loan Rates and Terms Are Fixed
It is a fact that many unsecured loans have a fixed interest rate and set period of time for repayment. In the case of larger loans, the repayment period is usually between five and ten years. While most lenders have fixed terms and rates, short-term loans can have a little variation and lenders like Clydesdale Bank are able to change the interest rate in certain situations, such as increasing the interest if a payment is missed or consistently late.
4. Loans Are Used For Any Need
While it is true that unsecured loans are often used for personal reasons, such as a holiday trip, most lenders have loans that are designed for specific needs and situations. An unsecured loan is usually designed around the needs of the borrower, like using funds to buy a car.
5. Requirements For Funds are Limited
While it is possible to find some unsecured loans that only require an address and proof of employment, many options will have further requirements. Depending on the size of the loan and the amount of time required for repayment, it might be necessary to allow a credit check and submit further financial documentation before funds are provided.
Obtaining an unsecured loan does not necessarily mean it follows the assumptions of borrowers. Each situation will differ, so the terms and conditions of a loan will not always follow the exact same pattern.
Fiona Harris contributes to many blogs including Frugal Plex, where she helping people save money and keeping abreast of latest financial developments.