If you don’t have any property or asset to use as collateral for your personal loan, this is where unsecured loans may be a viable option. Whether you have good credit or bad credit, there are a number of unsecured loans ready to help you deal with any financial emergencies. Here are 5 unsecured loans that may be good alternatives to secured loans:
1. Credit union
If you’re a credit union member, you don’t have to look elsewhere for a quick cash loan. The loan offers may not be as much as what a secured loan can offer but credit unions can enjoy lower interest rates than other types of unsecured loans. With credit unions, you may be able to borrow between £500 and £5,000.
2. Credit cards
You can also always resort to credit cards to tide up your short-term financial needs. Credit cards come handy for most purchases nowadays. If you need cash, you can always use your cards cash advance. Just make sure you pay your bill in full to avoid incurring extremely high interest rates.
3. Peer to peer loans
Another type of unsecured loans that’s been gaining ground in the UK market is peer-to-peer lending. With this type of loan, you can borrow directly from the lender. There’s no need to go through the middlemen like how it is with banks. Just go to a peer-to-peer lending website and post the amount that you need. If you meet the lender’ requirements, you should be able to get your cash within 24 hours.
4. Guarantor loans
Guarantor loans are another type of loan that does not require collateral but it does need you to bring a guarantor to co-sign the debt agreement with you. Guarantor loans offer larger loan amounts than other types of unsecured loans because of the guarantor involvement. This type of loan is specific for people with bad credit looking for a fast, low cost alternative to secured loans.
5. Payday loans
Payday loans are the most controversial type of unsecured loans. These are loans offered for people with credit rating issues. As the name suggests, payday loans are loans that need to be repaid on your next paycheck or in the next 28 days. Payday loans are controversial because of its steep interest rates. On average, payday loans are advertised with 1,000% representative APR. It’s not only expensive but it’s also traps most borrowers into a cycle of debt.