Personal Loan Questions
Have personal loan questions? We have answers. Check out our FAQ below for information that addresses our customers’ most common questions.
What is an unsecured loan?
Banks and other financial institutions base unsecured loans on the borrower’s creditworthiness, rather than “securing” the loan with collateral. When obtaining such a loan, borrowers generally need to maintain a high credit rating, as these loans carry greater risk for the lender.
What is a secured loan?
Secured loans, on the other hand, incorporate the pledge of collateral, which often consists of valuable assets or property, like a car, boat, or home. In the event of a default, lenders can repossess the collateral.
What are the benefits of an unsecured loan?
This is one of the most common personal loan questions we come across. Due to the lack of collateral, this type of loan does not require an appraisal, speeding up the loan process. Borrowers can often obtain approvals for unsecured loans in a matter of hours.
What terms are unsecured loans available for?
Unsecured loans often have higher interest rates. Because of that, borrowers tend to take out this kind of loan when they can repay it over a relatively short period. The amount that a borrower may feel comfortable repaying short-term (5 years or fewer) will vary from person to person.
Can unsecured loans help rebuild my credit score?
Yes -- in some cases. Most often, unsecured personal loans will be installment loans, which can help borrowers establish a history of repayment. Some lenders report this payment history to credit reporting agencies, which may improve the borrower’s credit score if they make timely payments.
What’s the typical duration of an unsecured installment loan?
Although unsecured installment loans typically have a scope of 5 or fewer years, this duration can vary by company. J.G. Wentworth provides access to a number of companies that provide this type of loan.