Racheal Vazquez

One of the most common misconceptions about borrowing is that you need to have collateral. This is just not true, and there are many ways to get a loan with no collateral. One option is an unsecured personal loan from your bank or credit union.

Unsecured loans do not require any security for repayment, but they come with higher interest rates than secured loans like mortgages or auto loans because it’s riskier for the lender.

Read on for more information about this type of financing and how it might work for you.

What is an unsecured personal loan?

An unsecured personal loan is just as it sounds—a loan that is not backed by any type of collateral. It’s available for a wide variety of purposes, including college tuition, medical bills, home improvement projects, or even consolidating high-interest rate credit card debt into one payment at a lower rate.

A secured personal loan is based on collateral such as real estate or an automobile you may own. The property’s value is used to secure the loan, and if you do not repay it in full, your assets can be sold by the lender (for example, they can repossess a car). With an unsecured personal loan, your assets do not serve as collateral, but the lender can take other actions to collect if you don’t pay.

Common uses for unsecured personal loans

Unsecured personal loans can be more flexible in many ways than secured loans. One significant advantage is that your property isn’t tied up, so you do not need to worry about arranging alternate living arrangements or keeping it insured and maintained.

Below are a few of the most common uses for unsecured personal loans:

Unsecured Personal Loans with For Student Debts

Students can use an unsecured personal loan to help pay off student loans or other debts. In some cases, the interest rate may be less than that of a credit card—and they don’t have to worry about going into debt from using an emergency credit card with higher interest rates.

Unsecured Personal Loans For The Unemployed

Many lenders are hesitant to offer loans to those who have had trouble finding a job or will not be getting a paycheck in the near future. If you are unemployed and need some extra cash, ask your lender if you qualify for an unsecured personal loan with no income verification.

Unsecured Personal Loans For Those With A Bad Credit Score

Even though the economy has improved significantly, many people are still struggling with bad credit. If you have had trouble paying loans in the past or simply want to consolidate your debt, an unsecured personal loan may be a good option for you.

Unsecured Personal Loan On H1B Visa

Can I get a personal loan on an H1B visa? If you were issued a work-related visa, you might be wondering how to get a personal loan with no credit check if your employer won’t verify your income. The good news is, many lenders will still consider providing an unsecured personal loan for H1B visa holders or those on other types of foreign visas.

How to compare unsecured loans

Like all types of loans, there are pros and cons to unsecured personal loans. Just as with any other type of loan, you should be sure that the benefits outweigh the risks before taking out a loan. To help you decide which option is best for your financial situation, consider these factors:

Loan Amount

Unsecured personal loans can offer a much higher loan amount than other types of financing. A typical credit card has an upper limit of around $15,000, but unsecured personal loans are available for much larger amounts. Before looking at other options like a home equity line of credit or a commercial business loan, you should see if you qualify for an unsecured personal loan with a higher ceiling.

Unpayable Balance

Some credit cards and other types of loans may offer a “grace period,” which lets you pay only the minimum amount due each month or not give full payment for several months at a time. That can be nice, but it also can lead to a lot of money being paid in interest.

Interest Rate

Interest rates on personal loans vary widely, and the best interest rate available will depend on your financial situation. If you have a good credit score (720 or higher) and don’t need to borrow very much money, you could qualify for an unsecured personal loan with a low interest rate.

How to qualify for an unsecured loan

Many unsecured personal loans have similar qualifications, but some lenders will make exceptions for certain types of borrowers. Here are the basic requirements for most unsecured personal loans:


Generally, you must be 18 or older to qualify for an unsecured personal loan. Both federal and state laws may apply, so check with your lender if you have any doubts about your qualifications.


You must have a steady income from employment in order to qualify for an unsecured personal loan. If you work on commission or are paid by the hour, you may be able to get some financing if your lender thinks it is likely that you will receive a full paycheck in the near future.

If your entire income is made up of tips, you may be able to qualify for an unsecured personal loan. Some lenders will base their decision on how much income is reported to the IRS. Others will look at your credit history and see if it appears as if you have had steady employment in recent months.

Credit History

Your credit history is the most important factor in determining whether you can qualify for an unsecured personal loan and how much you will be able to borrow. Understandably, the lower your credit score, the more you will have to pay in interest and other fees. Simply having a low credit score is not enough to disqualify you from an unsecured loan, however.

Applying for an unsecured loan

Applying online is becoming an increasingly common way to apply for a loan. You can also apply in person at your local bank or even over the phone, but if you already have an online account with your lender, it is often easier and more convenient to just go through that system.

Most lenders will require at least six months of recent bank statements and W-2 forms from you and your employer if you are taking out a personal loan because your income is one of the most important factors in their decision to loan you money.

Unsecured loan alternatives

If you cannot qualify for a regular unsecured personal loan, do not give up hope. There is still the possibility you can borrow money to meet your financial obligations and pay off the debt before payday arrives, without having to put up collateral.

●  Peer-To-Peer Lending

●  Credit Unions

●  Community Loan Funds

●  Loan Sharks

●  Payday Loans

●  Cash Advances on Your Credit Card


An unsecured loan is a great way to borrow money for almost any reason. You may have good credit but no collateral or you could be in between jobs and cannot afford to put anything up as security. Whatever the case may be, it pays to know your options before taking out a personal loan.

Make sure you are not being pressured into signing a loan agreement you do not understand, or that is not in your best interest. The more research you do and the better prepared you are, the easier it will be to handle your debt before payday arrives.

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