There was a time in America when unsecured loans were called “signature loans.” They had this name because unlike most loans they required no collateral. You were promising to repay the loan by giving your word, and writing your signature.
Wouldn’t it be nice if things were still that simple? When you could be trusted to be as good as your word, and your signature still had value.
Well, maybe those days aren’t so far gone. Unsecured loans still exist. They may be more scarce, a little harder to find, with lower limits for how much you can borrow. But they are still out there.
What are Unsecured Loans?
When you take out a mortgage for a house, you are using that home and property to secure the funds. If you fail to live up to your end of the contract and repay the necessary funds, the lender can take the house to offset their loss.
When you use a car title loan, you are securing the funds with the title paperwork for your vehicle. If you don’t pay it back, the lender can legally take your vehicle.
Unsecured loans require nothing from the borrower. The approval of the loan is based on your credit worthiness, in other words the likelihood the lender thinks you will repay them.
How Can You Find These Loans?
Lenders no longer advertise un-secured loans, or signature loans. But they still exist! Payday loans are one kind of unsecured loan. But the open-ended nature of this type of borrowing can make them incredibly difficult to fully repay.
Installment loans are currently the best, safest, and most frequently used type of unsecured loans. The application process is simple, and you can find out your approval status within minutes, sometimes within seconds. This makes it much easier to get information from multiple lenders at once before making your decision.