Who Can Get An Unsecured Personal Loan?

If you do not own a home or have other valuable property to use as collateral, you may think that you will not be able to get a loan to finance a big purchase. If this is the case an unsecured personal loan may be a good option for you. While the qualifications to get an unsecured personal loan are tougher than those of secured loans, it is still possible for many people to obtain one. Unsecured personal loans are designed for people who do not own a home or other valuable property or who may not have a very long credit history because they are young and have not had much time to establish one.

The major factor lenders consider for people applying for unsecured personal loans is a regular source of income. Applicants who are married, have stable employment, and have resided at the same address for at least two years will have the easiest time obtaining an unsecured personal loan, but even people who do not meet these requirements can still get a loan, just at a higher interest rate.

Lenders will consider your income when applying for an personal unsecured loanand will usually ask for proof of income in the form of pay stubs of a W-2. They will also do a background check which includes obtaining a copy of your credit history and credit score. The higher your income and the better your credit history and score are the lower your interest rate will be.

Usually lenders will give less for unsecured personal loans than they do for secured loans and at higher interest rates. This is because they are taking a bigger risk having nothing to repossess if you default on the loan. Unsecured personal loans still come with a range of terms which means that loan amount, the number of years you have to pay, the interest rate, and payment amount will vary according to your circumstance.