Personal Loans India : Personal and Business Unsecured Loans
Unsecured personal loans are loans that do not require any security/collateral. Also called signature loans as your signature is, at times, the only security taken when issuing the loans, these loans are availed of when a person is badly in need of money. In simple words, you get the loan even when you do not have property, stocks, bonds or money in the bank.
There are two types of unsecured personal loans, personal and business unsecured loans. In personal unsecured loans, the individual is responsible for repaying the loan.
There are two types of unsecured business loans – one, there is a personal guarantee for repayment (i.e. an individual is responsible for the loan being repaid). The second type is where the business as a whole is responsible for the loan being repaid.
The interest on unsecured personal loans may be higher than the secured loans, but the risk involved is less. In most cases it depends on the credit history of the borrower – and a good credit rating may help in getting a low interest loan. There are firms that give the borrower options of ‘no payments’ for a window period of six months or more. This gives time for the borrower to iron out his financial mess. And, there is very little paper work involved while applying for unsecured loans.
The interest rate for unsecured loans is fixed and remains stable till the loan is repaid. Also, compared to other types of loans, getting an unsecured loan is faster as people in need of emergency funds usually take these loans. However, this rule is exempted when the borrower has a bad credit history.