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The ability to secure secured loans is heavily reliant on collateral. This could mean that some requests cannot be granted or the applicant cannot get as much money as they need because they lack collateral or because of the limited value of their collateral. Secondly, unwillingness to face the risk involved with secured loans is another reason some people would only consider loans without security.
Many lenders are willing to offer such to interested and eligible people. Fortunately, there are also online platforms that make it easier to compare the rates and services of these lenders. Some compare as many as 30 creditors.
This makes it easier to make educated decisions when choosing a creditor. You can click here for more information about this. This article will provide answers to some frequently asked questions about this kind of credit line. Make sure to continue reading to find out some of the basic things about this kind of credit line.
What Can Funds from Unsecured Loans Be Used for?
The funds can be used for several things. Debt consolidation, tuition payment, paying for medical expenses, funding a vacation trip, home renovation, appliance purchases, and payment for driver’s training and license are some of the things it can be used for.
There is a long list of other things that the funds can be used for. On the whole, funds from unsecured loans have a flexible use feature. This is unlike options that are only structured to be used for the execution of specific projects or purposes.
How Soon Can They Be Processed?
They can be processed in a matter of hours and even minutes. Firstly, your creditworthiness needs to be verified by the lender. This would determine whether or not your request will be granted or denied.
Whichever the case is, a reply from the lender should be forthcoming in a few hours or even minutes. The positive impact of digital technology and internet services is a major reason things are this fast-paced.
At most, funds should be dispersed to you in 24 – 72 hours. However, you need to consent to the lender’s drafted agreement before this happens. By the way, this agreement is non-binding and this means that you are not obligated to consent to it.
This is also a reason to explore several creditors in the market to get the best deals available to you. The non-binding nature of these credit lines also means that they are open to negotiation, which is something that many borrowers fail to do.
What Are the Requirements for Getting Loans without Security?
By and large, the requirements for getting this kind of credit line are determined by general laws applicable in a location, as well as specific requirements by lenders. A lender’s requirements are what make them unique from other lenders. Some of the requirements have to do with:
Attaining a Certain Age
This is to be certain that the applicant is mature enough to take financial decisions such as applying for and securing a loan. The minimum set age in a country like Norway and many other parts is 18 years. Some lenders may even require that the applicant is no younger than 25 years in some cases.
Fixed Income
Information about the applicant’s income situation is very vital. This is especially the case with unsecured loans which are hinged solely on the borrower’s creditworthiness. The lender has to verify the income situation of the applicant in recent times for this reason.
So, income reports when applying for these credit lines need to be detailed. For example, make sure to report your passive income streams, if there are any.
Tax Status
The applicant needs to be a taxpayer to a reasonable extent, in most cases. So, the tax status of the applicant can seriously impact the possibility of being granted the loan or otherwise. This is not just about the lender’s decisions but fiscal policies.
Residency Status
There are general, as well as lender-determined laws on this. In Norway for example, the general law is that the applicant has been a resident for 3 years, at least. This means that this credit line is open to non-residents who meet this criterion.
However, some lenders have more stringent policies about this. For example, some of them will only grant loans without security to applicants who have a permanent residency permit, a Bank ID, and of course, a bank account. Non-residents may also be required to make additional information about their income, residency status, and identity available to the lender.
Can Changes be made to the Loan Agreement?
The loan agreement drafted by the lender and approved by the applicant can be modified in light of certain development. However, this is largely dependent on lenders as they may approve of the requested changes, decline the request, or demand that you make compromises based on their new terms and conditions.
Whatever the case will be, the borrower would need to reach out to the lender as soon as possible about the requested changes. Requesting on time greatly increases the chances of getting it granted.
What Are the Reasons for Requesting a Change in Loan Agreement?
There are various reasons borrowers may reach out to their creditors for changes to their loan agreement. Some of the possible causes include the following:
Need to Repay Earlier than Agreed
Some people would think that this is a good thing and should not be a problem. Well, it could be if there are set prepayment penalties. This means there could be fines for early payment, just as there are usually fines for late payment.
The decision to reduce the interest rate cost over an extended period, or to simply clear the debt earlier than agreed are some of the reasons borrowers may decide to repay early. Whichever the case is, you need to seek changes to the initial agreement. The lender may out rightly grant your request, deny your request, or reduce the severity of the earlier-set prepayment penalty.
Challenges Making Payment
Unfavorable changes in a borrower’s financial situation or unforeseen circumstances can lead to challenges in repaying debts. In such cases, lenders must be informed on time about the situation and the need to make changes.
For the record, the lender is not obliged to accept the request. However, it is not uncommon for lenders to grant such requests. Some of the ways this can be done include:
- Granting pay-free month
- Reducing the amount to be repaid in installments and extending the loan’s period
- Slightly or massively reducing penalties for late payment or underpayment
Lenders are usually very interested in the reason for such requests. As a result, they usually want to make inquiries and this takes time. This is one of the several reasons you should make your request on time.
Some solutions can be explored if your request is not granted. Debt consolidation through a refinance loan is an option. However, you need to go over the numbers to be certain that it is worth it. The services of a loan broker or other financial experts can come through for this purpose.
It is better to avoid being in situations when changes to loan agreements are required. This informs the need to think long-term before consenting to loan agreements. All these also inform the need to deal with reasonable lenders as some are more or less reasonable than others.
How Much Can You Get with Unsecured Loans?
This is dependent on several factors, mostly dependent on the lending company. But by and large, it is usually between 5,000 Norwegian Kroner for micro-loans to 500,000 Norwegian Kroner for large loans. Some creditors can even offer up to 600,000 Norwegian Kroner or a little over that to borrowers considered very eligible for such credit lines.
Conclusion
It is only logical that people understand unsecured loans better. To this end, this article has provided answers to some frequently asked questions about this credit line. You should bear them in mind as they would help you make educated decisions when it comes to taking out loans without security.
