What Are Unsecured Personal Loan Rates?
What are unsecured personal loan rates?
This is a common question among people seeking personal loans who don’t have any qualified collateral to put up against the loan. An unsecured loan means there’s no collateral required to “secure” the loan, or to protect the lender from total loss should the borrower fail to repay the loan. As a result, unsecured personal loan rates are typically higher than those of secured loans because the lender is at greater risk of loss.
Secured vs. Unsecured Personal Loan Rates
Examples of secured loans include mortgages or auto loans. If you fail to pay the loan, the lender can take your home or car (the collateral). Other secured loans can be a personal loan where an item of collateral—often a vehicle or piece of property—is put on the table for the borrower to take should you fail to pay. Because the borrower is offering up an item of value, secured personal loan rates are often found to be lower than that of their unsecured counterparts.
With no collateral, the lender must weigh the risk versus reward associated with providing an unsecured personal loan. Examples of unsecured personal loans include credit cards or education loans. When applying for unsecured personal loan rates, the lender will often look at things such as the borrower’s credit score, debt load, income and size of the loan.
Local banks such as First Bank are often more likely to give unsecured personal loan rates than a large, national bank as they are more likely to know you on a personal level and be more tightly connected to your personal finances.*
If you’re looking for a personal loan, contact First Bank today to get started.
Loans subject to credit approval.