Unsecured loans are a type of loan that does not require collateral and are usually determined based on your credit score. Unsecured loans can vary on type, fees, and interest rates. Before taking out an unsecured loan, it is important to understand the different types, where they come from, and the fees associated with them. 

Types of Unsecured Loans 

1. Student Loans: Student loans are unsecured loans because you do not have to offer up collateral to obtain them. Oftentimes, all you have to do is meet certain academic requirements in order to qualify. 

2. Personal Loans: Personal loans are large loans that must be paid back in fixed monthly payments. It is not uncommon for borrowers to take out personal loans to pay for home repairs or solidify all of their debt into one payment. 

3. Revolving Loans: Revolving loans are on a cycle that gives the customer a certain amount of money to be used, paid back, and used all over again. The most common type of revolving loans are credit cards. These loans are attractive because they seem never-ending, but if they aren’t paid back on time, they can have a lasting effect on your credit score.

Lenders That Offer Unsecured Loans 

Unsecured loans can be obtained through several different lenders. The type of lender you choose can affect the fees, interest rates, and size of your loan. Common unsecured loan lenders include: 

1. Banks 

2. Credit Unions

3. Individual Investors

4. Online Lenders

Rates and Fees Associated with Unsecured Loans 

Although the initial borrowing risk is low because collateral is not required, the rates and fees associated with unsecured loans can be high. 

· Interest Rates: Interest rates can vary based on a number of things. Everything from your lender to credit can affect how high or low your rates are. On average, interest rates will be between 4 – 36%. 

· Origination Fees: Origination fees are charges for taking out a new loan. These fees can be between 1 – 6% of the loan amount. 

· Prepayment Fees: Paying off all of your loan in one payment seems like a great idea, but this keeps lenders from the interest they are receiving off of your loan. To avoid this, lenders will often charge a prepayment fee to ensure they receive their desired amount of money.   

· Late Fees: Not only can missing a payment reduce your credit score, it can mean you have to pay a pricey fee. Late fees can vary based on your lender, but they can be easily avoided by making your payments on time. 

Unsecured Loan Professionals

Progressive Debt Relief has spent over a decade helping its clients get out of unsecured debt, including payday loan debt. We understand how difficult debt can be to tackle, and that’s why our professionals will work with you to address your debt problem and settle your debt with our proven strategy. If you have any questions about our services or want to schedule your free consultation, contact us today.