Whenever finances fall short, borrowing

is the first thought that occurs to us. But, there remain many

apprehensions in the mind regarding the loan deals. Most borrowers

are lured by the idea of unsecured loans and fear taking secured

loans that require an underlying asset or collateral.

In case of unsecured debts, the

creditor lends money on the basis of the credit profile of the

borrower and doesn't demand the home as security. For this reason,

unsecured loans carry more risk for the lenders that they compensate

by charging a high rate of interest and less flexibility in terms of

repayment options.

Cited below are some of the

characteristic features of unsecured loans.

• The lender does not attach
  
  any value to the loan i.e. no security is demanded
• A credit check of the
  
  borrower is carried to know his repayment history and paying
  
  capacity
• The amount generally ranges
  
  in between £500 to £ 25,000
• The repayment period can
  
  stretch from one to ten years
  
• These loans generally carry
  
  high rate of interest because of the absence of security
  
• If the borrower owns a
  
  house, he may get an unsecured loan at cheap rate
• In case of default by the
  
  borrower, he can be sued by the creditor in the court of law
• The processing of unsecured
  
  loans is faster than secured loans
• Elimination of legal
  
  property evaluation and less documentation makes the disbursal fast

As stats reveal, most borrowers in

Brits are in debts, and the year 2006 saw an alarming hike in the

number of personal insolvencies. This clearly indicates the growing

market of bad credit personal loans. Since most of the borrowers

already have many debts against their homes, unsecured

loans

are their only saviours. The high street banks have declared their

stringent policies in terms of unsecured loans, and they seldom grant

any ad credit loan. So, private and online lenders are the ones who

come handy to the borrowers. Though the interest charged on these

loans is considerably high, borrowers avail them to get rid of their

multiple debts on credit cards and other personal loans.