Unsecured Loans

A fast unsecured personal loan is a loan requiring little or no documentation, security, or time before the money is given to the borrower. As an investment tool, this type of transaction can be ideal; however, only financially sound and savvy borrowers should consider them for this purpose. Investors should first ensure that there is neither prepayment penalty nor short-term conditions on the amount borrowed. If a prepayment option is allowed, the amounts can always be refinanced later under more favorable terms and rates. Although it may mean being charged additional processing fees, borrowers might consider applying for an unsecured lending arrangement in order to obtain immediate cash, and then apply for a more traditional secured option, which will require documentation and time, a little bit later. Fast unsecured personal loans are less advisable for borrowers with a history of credit problems, debts, or increasing needs and out-of-control spending habits. They typically have the highest interest rates, which makes their use of dubious value. Objective analysis should reveal the borrower's true need for such an arrangement and the risk of taking out a fast unsecured personal loan should be justified as the payments will add to the borrower's monthly obligations.

Payday loans are an example of this type of transaction. A fast unsecured personal loan based on a pay check is a small, short-term loan for cash in exchange for a personal post-dated check or authorized withdrawal from the borrower's checking account. These are for short one- to four- week intervals, and they are based upon the paycheck. No one should believe the deceptive claims regarding these kinds of fast unsecured personal loans. Although they are legitimate offers, they almost always charge extremely high interest rates and possibly additional fees. Plus, there is a real danger of escalating debt when the interest rates and potential overdraft fees accumulate to an exorbitant amount that the borrower cannot repay without mounting still more debt. If consumers are not cautious, they are likely to fall prey to the aggressive marketing campaigns that promise easy money.

A fast unsecured personal loan will not jeopardize the borrower's home or other assets since the amount borrowed is not secured by anything such as a home title or deed. However, this does not mean that taking the money is without risk. Scrutinize the advertisements for payday and other such money programs and find implied promises that appeal to man's sinful nature: "Get the cash you deserve" and "make your dreams a reality." These ads target the wish to spend. Wise borrowers will not be tempted to use fast unsecured personal loans for impulsive or discretionary spending.