Unsecured Loans

Unsecured personal loans are installment loans that don’t require collateral. This means you won’t need to pledge assets, such as a home or retirement savings, to secure the loan. Instead, the loan is based on your creditworthiness. You borrow a set amount upfront and repay it in fixed payments over time.

Common uses for unsecured personal loans include home improvements, debt consolidation, and other major purchases. 

Advantages of Unsecured Personal Loans

One of the main benefits is that you don’t need to provide collateral. This eliminates the risk of losing personal assets if you default on the loan.

Unsecured loans offer flexibility and can be used for various purposes without requiring extensive documentation. Unlike SBA loans, business financials aren’t necessary if you use the loan for starting or purchasing a business; approval is based solely on your credit history.

Unsecured Personal Loan FAQs

• Can I use a personal loan to start a business?
  Yes, unsecured personal loans can be used to cover business or franchise costs. 

• How does a personal loan affect my credit score?
  Initially, a “soft” credit check will assess your eligibility without impacting your score. A “hard” credit pull, required for the loan application, might lower your score slightly, but usually only temporarily. Multiple inquiries within a short time are usually counted as one. Defaulting on the loan will significantly impact your score. 

• What’s the difference between secured and unsecured loans?
  Secured loans require collateral, often resulting in larger loan amounts but higher risk. Unsecured loans don’t require collateral, allowing you to avoid risking personal assets while still securing reasonable interest rates. 

• What is the interest rate for an unsecured personal loan?
  Interest rates vary based on economic factors and individual lender policies. Contact a Jumpstart Finance Loan Advisor to find out the rates you might qualify for based on your credit.