What you should know about unsecured personal loans

Many different types of financial institutions, including banks, credit unions, online lenders and peer-to-peer lenders offer unsecured personal loans. Make sure to shop around to find the best fit for your financial situation.

Here are a few more things to think about when it comes to unsecured personal loans.

  • No collateral — You don’t need to provide collateral to get an unsecured personal loan. 
  • Credit plays a role — Lenders will factor in your credit when making loan decisions, and people with higher credit scores typically qualify for lower interest rates.
  • Fixed interest rate and term — Many personal loans have a fixed rate and term, which means you make equal monthly payments over the life of the loan, so it’s easy to budget. But keep in mind that interest rates may be higher on unsecured personal loans than other loan types, such as auto or home equity loans, where your property is used to secure the loan. 
  • Loan amounts and repayment terms — You can choose from a variety of loan amounts and repayment terms, but some lenders charge an origination fee to cover the cost of processing the loan, which can eat into your loan proceeds.

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