If there is money, but the bank does not issue the loan due to lack of collateral or you have received a negative answer elsewhere because you do not have real estate, surety or other collateral, you do not have to repent because the loan can be obtained completely without collateral. The name of this type of loan is an unsecured loan and it is a great solution for those who do not have tangible assets that would be suitable for collateral or if you do not want to use your property as collateral.
What are unsecured loans?
An unsecured loan is a loan that does not require collateral or any other type of collateral for the loan – unsecured loans are non-guaranteed loans. The total risk of the loan is therefore borne by the borrower because the unsecured loan is issued only on the basis of the borrower’s account statement and other necessary credit certificates. If the borrower is unable to repay the loan, the borrower will have no other way out if the debt is recovered by judicial means. In the case of collateral loans, it is likely that the debt will be recovered in the form of collateral collateral, which means that the risk is much lower. An unsecured loan therefore has a higher interest rate because the lender is a loan with a very high risk and the possibility of getting out of the “sour” loan is therefore much higher.
Unsecured loans are usually small loans such as fast loans, sms loans and consumer loans, and most lenders, including banks, issue unsecured loans. Unlike collateral loans , the unsecured loan is much smaller, which is also explained by the high risk group, but such loans are often up to five or ten thousand euros, which is a large enough amount to buy either a new car or repairs at home.
The unsecured loan also differs from the collateral loan in terms of simplicity and affordability of the application process. Since it is not necessary to set up a mortgage, assess the property or repurchase the property in order to obtain the loan, and therefore it is not necessary to make the corresponding expenses, applying for the unsecured loan is favorable. The only loan costs are the loan agreement and interest expense. They can also be minimal for a new customer – many loan companies offer new loans to new customers, which can be interest-free and with a contract fee of just a few euros.
Although the interest rate on unsecured loans is significantly higher than the interest rate on secured loans, there are more flexible conditions, quite large loan amounts and a simple loan application process, which makes it worthwhile to consider taking unsecured small loans.
When would it be worth taking an unsecured loan?
An unsecured loan is particularly suitable for three situations:
- If there is no collateral or guarantor – if a loan is needed, especially in a larger amount, but there is no suitable vehicle, real estate or guarantor, then the loan with the collateral does not come out and the only solution is the unsecured loan. Higher interest rates should be considered, but in the absence of collateral, this is the only suitable option.
- If money is needed quickly – even if you have assets that could be applied as collateral, a secured loan may not be a good option if you need money quickly. Unsecured loans differ from collateral loans because of their speed, and in some cases, an unsecured loan can only be obtained within an hour. Although there are also secured loans that do not take the loan process for a very long time, the average processing time for mortgage loans is a week, because to get a loan, the real estate object has to be evaluated and the time for the mortgage must be agreed with the notary. Therefore, it is wise to take an unsecured loan when it comes to covering sudden expenses.
- If the desired loan amount is not very high – applying for secured loans can be quite costly and reaches several hundred euros, due to property valuation, contract fees and notary costs. If you want to borrow up to 5,000 euros, then it is not worthwhile to go through complicated procedures and therefore consider unsecured loans instead. Loans secured with collateral are more suitable when the loan is in the range of tens of thousands of euros. The same applies to the loan period. The repayment period of unsecured loans is usually 12 months, in some cases also 2-5 years, so the unsecured loan is suitable for the first time if you want to pay the loan over a shorter period of time and not take the loan for a long time. A long-term loan may become burdensome, especially for large sums, so a collateral loan is only a sensible option if the amount of money is really needed – for example, to buy a home.
How to take an unsecured loan?
It is extremely easy to take an unsecured loan, and at best you can only get a loan in an hour. First you need to choose the appropriate lender whose loan terms and loan amounts are appropriate. However, it should be borne in mind that unsecured loans should only be taken from companies that have received the creditors’ license from the Financial Supervision Authority. If you should see somewhere tempting announcement, with the content ” I give a loan without collateral and interest-free”, then you should keep it away, because it is definitely not a secure loan.
Although the terms of unsecured loans are different, the most common loan can be applied for from 18 years of age. In the case of secured loans, the threshold may be higher and no loan will be granted if the applicant is 75 years old at the end of the loan repayment. However, the most important thing is to prove a permanent monthly income, which has to be done by submitting a bank account statement for the last six months – for this reason the unsecured loan is also called a loan for income guarantee, as the only guarantee for paying the loan is an extract showing a sufficiently large income. For the purpose of obtaining a loan, the monthly obligations should not be more than 40% of the income, so it should be taken into account when choosing the appropriate monthly amount. However, there are no other restrictions on applying for a non-secured loan – if there are no payment defaults, you are at the right age and you have enough monthly income to deal with loan payments, the loan response is quite positive.
If you have found a secure and pleasant loan with the right terms, you only need to fill out a loan application online. The most important thing is to provide accurate information about your existing obligations and income with a loan application. The more accurate the information, the easier it is to get a loan. The loan application is then reviewed and a decision made. If you make a loan application during your business hours, the answer will be in a few minutes.
After receiving a positive response, an additional identification process must be performed. This means that the borrower must contact the Omniva post office or the lender’s office with his / her identity document and fill out the form. If personal identification is also done, the loan amount will be transferred to the applicant’s current account immediately. The process is even faster if both parties – both the applicant and the loan company – have a current account in the same bank. In some cases, the loan is also available at the weekend, depending on the lender’s working hours.
For unsecured loans, it should mainly be considered that the loan amounts are lower, the interest rate is higher and the loan period is shorter than in the case of collateral loans. Therefore, an unsecured loan for sudden expenses or for smaller expenditures for which there would be no practical amount of collateral loan – for example, to make repairs at home, to buy a technique or to go on a trip, the purpose of an unsecured loan is not limited. Unsecured loans are very flexible and allow you to borrow without having to use your assets.