Reasons to Use an Unsecured Loan to Fund Your Home or Business Ventures

Finding the money to support whatever you’re doing at home or in the office can be tough. That’s especially true when you are brand new or have a relatively short credit history. As such, getting an unsecured loan can make a big difference.

However, because of the strict guidelines set forth by most creditors when it comes to doling out unsecured loans, many consumers are hesitant to accept one. Fortunately, there is a bright side. The following are the top five reasons to use an unsecured loan if you can:

1. The Credit Limits Are Typically Higher

The task of funding large home or work projects can be overwhelming. And while a substantial loan could fix many issues you might be facing, the only way to get enough money is to accept an unsecured loan. Unsecured lines of credit typically offer much higher spending limits than their secured counterparts which must keep the loaned amount commiserate with the collateral presented. In many cases, the right third-party source with good lender connections can get you plenty of funds without needing anything up front. 

2. The Repayment Structure Is Flexible

We all know that life can be unpredictable, which is why agreeing to a long-term contract is scary. Fortunately, many unsecured loans come with flexible repayment plans to make the ups and downs easier to manage. Unlike secured loans which require extremely rigid terms, unsecured loan options can sometimes provide grace periods or structure resettlement as needed.

3. It Can Improve Your Credit Score

In general, there are three ways to use unsecured loans to improve your credit rating:

• Pay at least the minimum amount due on or before the statement date.

• Always pay more if you can, as this will shorten the loan terms and reduce the amount of interest you owe.

• Allow the loan to run its course for 6-12 months before paying it off, that way the credit reporting agencies will have a chance to recognize a pattern and put it on your profile.

With proper and responsible use of unsecured loans you can even weather unpredictable life events and market fluctuations without causing damage to your hard-earned credit score. And under the right circumstances, you can even get an unsecured loan with a 0% introductory APR which further quickens and simplifies repayment.

4. You Don’t Need Any Collateral or Down Payment

Perhaps the most attractive feature of an unsecured loan is the fact that consumers and businesses don’t need to relinquish personal property to secure the money they need. Like clockwork, unsecured loans are obtained through a simple underwriting process which typically includes the following three steps:

• The application is filled out by the borrower, using minimal information such as proof of income, identification, and a quick credit check.

• The application is then reviewed by the lender and either approved or denied.

• The applicant is either given the money borrowed or line of credit extended or they are sent a denial notice in the mail.

As always, before accepting any amount of money in an unsecured loan, be sure you’re given a chance to review the terms of the contract.