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What are unsecured loans, and how they are different from the secured loans?

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Overview of unsecured loans:

Unsecured loans are the types of loans that are not backed by collateral and available at the high-interest rates. These types of loans are generally offered by the online money lenders. Credit cards and payday loans are the best examples of unsecured loans. That means a moneylender gives you a spending limit as per your income and repayment capacity. While the unsecured loans make sense for some people, the only downside of these loans is high-interest rates. While secured loans interest rates are relatively lower than unsecured loans because here, borrowers put collateral and assets against the loan. The reason why a money lender charges high-interest rates on the unsecured loans is to offset the risk of losing money. These types of loans are designed to meet the urgent needs of the people whose credit score is poor. Because an online money lender never checks your credit score while approving the loan request.

Eligibility criteria for the unsecured loans:

The following are the documents that you need to submit to be eligible for the unsecured loans.

  • Proof of identity. 
  • Proof of income. 
  • Proof of age. 
  • Proof of address. 
  • Proof of self-employed. 
  • Proof of education. 
  • 3 months of a bank statement. 

If you can provide the above-mentioned documents to the moneylender, he will approve your loan application and transfer the loan to your account.

Difference between unsecured loans and secured loans:

Below we have mentioned the actual difference between the unsecured loans and secured loans.

Definition; An unsecured loan is a type of loan which is given to the borrower on his commitment of repaying rather than collateral. While availing a request for the loan you don’t need to put your assets. 

A secured loan is a type of loan in which the borrower pledges some assets like car, house, or gold to get a loan. The reason why a lender asks you to put assets against the loan is to offset the risk of losing money. In case, if you are unable to repay the amount on time, they will keep your property. 

Interest rate: The rate of the unsecured loans is relatively higher than secured loans because a lender doesn’t ask you to pledge the assets to offset the risk of losing money. So, to protect their money from losing, he will charge a high-interest rate. 

The interest rate of the secured loans is relatively lower than unsecured loans. Because here you need to put the assets against the loan. In case, if you are unable to give EMIs on time, the lender will take your property.

Credit score: While opting for an unsecured loan, you don’t need to show your credit score. Because a lender only designed these types of loans for the low credit score borrowers. No matter whether your credit score is below 650 or above, the lender doesn’t consider it. 

While opting for a secured loan, you have to show your credit score, if your credit score is above 750 and only then you get a loan at the lowest interest rates. In other words, a better your credit score a lower the interest rate you will get.

Repayment: The repayment procedure of the unsecured loan is similar to the secured loans. You have to pay an installment as per your suitability like monthly, half-yearly, and yearly.

How to get an unsecured loan?

The procedure for getting an unsecured loan is straightforward. All you need is to do, just choose a reliable money lender who offers you to loan Singapore at the best interest rates. Fill out the application form along with documents. Once you submit the loan application, it will be reviewed by the lender; if everything is fine then he will approve your loan application and transfer the amount as quickly as possible. One of the most appreciated reasons for the unsecured loans is the easy approval process. You don’t need to submit a bunch of documents and assets to get a loan. 

How to get a secured loan?

The procedure for getting a secured loan is time-consuming. Because here you need to submit a lot of paper documents to the bank. The whole loan process will take more than 2 weeks. Along with that if you are unable to satisfy the bank with your papers, and then it will take no time to reject your application. So, if you need a loan urgently, then it is better to opt for an unsecured loan than secured loans.

Over to you:

Unsecured loans easily get approved by the lender, and money will be credited to your account on the same day. So, these types of loans work better in an emergency. But, if you have time to meet the needs, then you can go for a secured loan. So, if you are looking for a reliable money lender in Singapore who offers you a loan at the best interest rate then visit easycredit.com.sg.

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