Welcome to the kNOWledge base

Everything you need to know about personal loans

Home  >  Articles   >   What is an Unsecured Loan?

What is an Unsecured Loan?/p>

When shopping for loans borrowers will often see the terms “secured” and “unsecured” used to describe a loan. So, what is an unsecured loan? Unsecured loans are loans provided by a lender to a borrower, without an asset used as collateral to protect the borrower against missed repayments or defaults. For example, a secured loan is called such as it is secured against a car or the borrower’s home. If a repayment is missed or the account defaults, the asset used to secure the loan is seized and sold as a means of repaying the loan. As there is no such asset used in this case, the loan is an unsecured one. Due to their nature, the funds available from unsecured loans are generally lower than with a secured loan, and the interest rate higher, as there is a greater degree of risk attached to an unsecured loan.

Category: NOW FINANCE

Other video’s you might like


Stay up to date with the latest finance tips, exclusive offers and receive our latest articles delivered directly to your inbox.

Subscribe

Approved customers only. Terms, conditions, fees and charges apply. All applications are subject to NOW FINANCE’s lending and approval criteria. Settlement times may vary depending on circumstances. Loan repayment terms range from 18 months to 7 years. Interest rates range from 7.45% p.a. (9.07% p.a. comparison rate) to 16.95% p.a. (18.53% p.a. comparison rate).

*Comparison rates are based on a loan of $30,000 over 5 years.

WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

EXAMPLE: An unsecured personal loan of $30,000 borrowed for 5 years with the interest rate of 7.45% p.a. (9.07% p.a. comparison rate), would estimate to a minimum total amount payable of $37,741.60 via the weekly payment option (including a $495 establishment fee and $13 per month administration fee). Rates are subject to change.

NOW FINANCE is a trademark of Now Finance Group Pty Ltd | ACN 158 703 612 Australian Credit Licence number 425142