Unsecured Loans

How do unsecured loans work?

To get a better idea of how unsecured loans work, it’s important to talk about the difference between an unsecured loan and a secured loan. That way, you can work out which of these personal loans will suit you and your financial needs best. Spoiler – it’s mainly to do with the amount you want to borrow.

A secured loan is a loan, usually for a larger amount of money, such as a home loan, that requires you to provide some form of security against the loan to the money lenders. The security will be in the form of an asset, such as your home or your car, and will serve as a guarantee to the money lenders. What it guarantees is that if you default on your loan and don’t pay back the money, the lenders can take possession of your asset and sell it to recoup some or all of their funds. This is because secured loans are usually not small personal loans. The money lenders want to protect against risk as they usually lend you a large amount of money. A plus of this type of loan is that generally speaking, personal loan interest rates are lower on secured loans as the risk is lessened by the use of an asset as security.

However, if you are looking for small loans or cash loans such as a travel loan or a loan for a little bit of rent assistance, then you will probably be looking for unsecured loans. Unsecured loans mean that you don’t have to provide any security to the money lenders to secure the loan, so this usually means the amount you can borrow is lower - usually up to around $50,000. It also means that the interest rates may be a little higher. That’s to offset the risk. Of course, it does pay to shop around to see what different money lenders are offering in terms of interest rates. Not having to secure the loan also means that you won’t lose any assets if you default on the loan. However, it’s never a good idea to default on a loan as this will adversely affect your credit score and future borrowing. Therefore, you really need to ask yourself, “How much can I borrow?” before you consider any kind of loan. Plugging a few numbers into an online personal loan repayment calculator will give you an idea of how much the repayments would be, and then you can see if that fits into your budget. Unsecured loans may tend to be more short-term loans, with repayment required faster than a larger secured loan, so keep that in mind.

Neither of these types of loans, what you are looking for? Then you can always apply for a credit card which will provide you with a continuing line of credit. This means you can get cash fast without having to apply for a loan once you have your credit card. You do need to pay it off regularly still, and it’s best to pay it off in full each time to avoid interest. A bonus of this kind of borrowing is that a virtual credit card can be basically instant - ready to use in minutes, subject to approval. The amount you can borrow will usually be lower, however – usually up to about $15,000.

Here at Ozzie Loans, we have a range of lending services available online, including unsecured loans. That means we can help you out when you need some easy finance, and you need it fast. Renovation loans, boat loans – that’s up to you to decide, but what we do is offer quick loans with an easy online loans application process. When you want to apply for cash loans online, at Ozzie Loans, everything is at your fingertips with minimum paperwork saving you the hassle of sorting out documents and filling in endless forms. Subject to approval, and if you meet our minimum requirements of being over 18 and a resident of Australia, we can even offer same day loans to get you the money you need fast. Remember, we are concerned about responsible lending, so we will need to check out financial information such as your credit report and bank statements to make sure you can afford to borrow the amount you would like.

Check out our services online and apply now – you could have the cash you need in your bank account today.