Instant Unsecured Personal Loans

The personal loan industry has become better connected to the consumer thanks to the advance in computers, the internet, and the ability to make financial transactions instantaneously. It was only a decade ago that most people still used checkbooks, and checks had to be cleared overnight by banks and the Federal Reserve System. Today, checks clear instantly, and personal loan companies can now provide instant unsecured personal loans to anyone in the country in a matter of moments.

As a general rule, any loan in which acceptance is instant is often limited to small amounts of money. Small, of course, is relative, however most lending companies will issue credit lines and instant loans worth anywhere from $500 to $5000. The amount of money depends on your credit, your income, and your likeliness to repay the loan, as well as your current outstanding balances.

Unsecured Loans
Unsecured loans are those which are not secured by collateral or your income. This means that should you default on the loan by failing to make payments on time, or should you slip into bankruptcy, the debt is erased and the creditor is left with nothing. Of course, failure to pay on an unsecured debt does mean that your credit score will take a hit due to your poor payment history.

Borrowers tend to prefer unsecured credit lines and personal loans because they do not put any liens against their property including their home, car, or other valuables. A mortgage, for example, is secured by the lender’s right to seize your home. A car loan is secured by the lender’s right to seize your car. An unsecured loan is secured by a lender’s right to take you to court, which is infrequent, mostly because the cost of going to court is multiples that of writing off a small loss on the income statement.

Pay up
Because unsecured loans are not collateralized, they typically come with interest rates and fees that are higher than average. In some cases, unsecured personal loans may be more expensive than a credit card!

Most people who use unsecured loans are in a cash crunch, and need cash quickly to pay bills, cover emergency expenses, or otherwise patch over a temporary lull in income. In the eyes of a banker, an unsecured loan is risky in that they cannot take your property, and you are under little obligation to pay past your means. Thus, lenders charge higher interest rates and origination fees to cover their risk of loss.

There are two major types of unsecured personal loans:
Payday or cash advances are loans intended to cover the cash needs of a borrower for a very short period of time, often less than one month. These are the most expensive loans, as they are often issued with high standard fees on top of very small loan amounts of $500-1500. Cash advances are approved instantly, and are offered to borrowers regardless of their credit score. More importantly, cash advance companies want to see that your income will be large enough to cover the cost of debt service.

Unsecured credit lines from a bank or other lending institution are a better alternative, as they are often less expensive in terms of their effective annual interest rate. Further, the larger dollar amount of these loans helps to dilute their higher cost of issue. Even with unsecured personal lines for large amounts of money, origination fees are the norm.

Why Get an Unsecured Personal Loan
Unsecured personal loans are excellent for people who
1. Do not own their home, and thus cannot tap their home equity
2. Do not have a credit card with a large credit line or available balance
3. Want an easy to access loan to use however they wish
4. Have decent, but not excellent credit scores

The first place to seek out an unsecured personal loan is your local bank, especially if you already bank there and have an open checking or savings account. Since the bank can see your deposit and withdrawal history, and also your ability to keep your account in good standing, they’re more likely to issue a loan with a lower rate of interest than other lenders.

For small amounts of money, it is recommended that you pay a visit to an unsecured cash advance center, a telephone cash advance lending company, or search the web for the best deal on unsecured personal lines of credit. Ask for the fees and expenses, the APR, and the EAR before accepting credit from any company.