Loans are sums of money lent to borrowers, which are to be paid back within a stipulated time period with an interest fee to be paid to the lender which is how he sustains his lending business. However, how can lenders be assured that his money will be returned? That reason is what birthed the concept of secured loans - where the borrower’s assets are provided as collateral for the loan. In the event that the borrower is unable to repay the secured loan and depending on the terms of the loan, the lender will take ownership of the borrower’s assets therefore reducing or negating his loss.
However, the biggest drawback of secured loans is that it completely fails to serve those who have minimal assets or come from non-affluent backgrounds. That’s where unsecured loans come in.
Benefits of Unsecured Loans
Financial institutions like OnCredit give out unsecured personal loans to those who urgently need to borrow money but do not have substantial assets to show as collateral. Unsecured loans usually just require the borrower to be of legal age (above 18 years old). If you are at the age of 18 or more you can easily get your hands on an unsecured loan.
If you have an income you can get your hands easily on an unsecured loan. You do not need to be drawing a substantial amount of money as a salary. With a minimal salary, you can easily apply for an unsecured loan. Usually when applying for a secured loan, you need to provide for a stable income, usually above a certain salary scale and should be a permanent employee of a company. You also need to provide for payslips and salary confirmation letters from your employer, this problem is nonexistent in unsecured loans. The regular source of income can be considered the guarantee to the lending party that the borrower has the means to repay the unsecured personal loan.
There is literally no documentation required to upload when obtaining an unsecured loan. The only documents needed when application of an unsecured loan is the photos of themselves and their National Identity Card. Further, secured loans have a huge pile of documents that you need to submit before you can get your hands on the loan for credit evaluation purposes.
Unsecured personal loans online also tend to be very quick which means that the borrower can get the money to his hand in a matter of hours, whereas had they tried to apply for a loan from a bank, they would need to obtain letters from their employers, collect the last 3 months’ salary slips and wait for days or even weeks to receive the money. The registration process takes literally up to 5 minutes as it is a mere 6 step process that users need to go through for application of loan.
There are more benefits that unsecured loan forms can cater to. Unsecured personal loans do not take any collateral unlike secured loans due to the nature of the business. This inturn reflects on its interest rates. Due to the absence of collateral when it comes to unsecured personal loans, the interest rates, borrowing period and amount of the loan is impacted.
Even the best unsecured personal loans in Sri Lanka (like what we offer at OnCredit) have higher interest rates and service fees to cover any possible situations where borrowers default on their unsecured loans. Because this kind of concept usually entails a higher risk rather than secured loans. The only collateral you bring when you apply for unsecured loans online (apart from your regular source of income) is your character, social standing, employment and references. If you have managed to lead an exemplary life, you may find that you are eligible for the best unsecured loans that rival even personal loans from a bank. If you have a history of bad credit, you might not be eligible for the best unsecured loans.
Unsecured personal loans are quite often a blessing for people who need quick cash but do not have sufficient assets to submit as collateral. During a market study carried out in Sri lanka, over 90% of the users who used the services of unsecured loan providers have mentioned that such companies are godsend for them at a time in need or emergency. The only risk you will be undertaking is the impact on your credit score in case you are unable to make your payments on time. Whatever option you choose, secured loans or unsecured loans online, ensure that you choose wisely about what works best for you.
Contact OnCredit or browse through its website on OnCredit.lk to find out more about the best unsecured loans in Sri Lanka.