An unsecured loan is a loan taken without offering any collateral. Collateral is nothing but a material assurance for the repayment of the loan. In the UK, a home is generally used as collateral. For a home to be used as collateral there should be sufficient equity available in it. A vast majority of borrowers in the UK do not own a home. For this group of people, unsecured loans are the only available option.
Barring a few customised loans, all the other loans are available in unsecured type. If you need an all-purpose unsecured loan then you can go for an
unsecured personal loan. There is no restriction in the use of unsecured personal loan.
Unsecured loans are a favourable option for not only the tenants and non-homeowners. This kind of loan also remains a suitable alternative for the borrowers who do not want to offer their home as collateral. Using the home as collateral is bit of a gambling. If you fail in your repayment, the home will be lost.
Therefore, those homeowners who are not sure of their financial future can take unsecured loans to avoid risking their property. In addition to keeping the borrower risk free, unsecured loans offer some other benefits. These loans can gratify the need of instant cash release.
The processing of unsecured loans is simpler than that of secured loans. There is less paperwork in this kind of loans as no collateral is attached to them. The hassle and expenditure of property assessment is also not there in
unsecured loans.
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