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Here’s How You Can Borrow Money Without Collateral

Getting a loan may be challenging if you don’t have any properties under your name. Generally, banks prefer to lend to those who can offer collateral or assets that can be used to guarantee repayment. Still, it’s not impossible. Even though you own property assets, you may not want to put them up as collateral. That’s fine– that’s what non-collateral loans are for.

What are non-collateral loans?

These are unsecured loans that do not require you to present assets like cars or real estate. As a result, the application process is much shorter, and you can claim your borrowed money much quicker. Here’s the caveat: interest rates are also much higher than loans secured with collateral.

Two kinds of non-collateral loans:

Payday loan: This is a small amount of loan you have to pay back upon receiving your next paycheck. The lender will not look at your credit history– as long as you have a stable source of income, you can qualify for one.

Traditional non-collateral loan: Your credit history will weigh heavily on your chances for this one. The interest rates are also off-the-charts (usually above 20%).

Requirements to apply for a non-collateral loan

Different lenders require different documents, but here are some of the most common requirements to get your application process going:

– Government-issued valid I.D. (Passport, UMID, Driver’s License, etc.)
– Application form, completely filled out
– Proof of income/employment for payday loans, and
– Credit history/bank statements for traditional non-collateral loans

These are basic documentation requirements that are easy to comply with. This makes non-collateral loans the loan of choice for short-term and temporary cash shortage. However, it’s worth reiterating that the interest rates for this kind of loan are always high. While home loans or car loans can span more than 15 years, non-collateral loans are but a stop-gap solution, and you are expected to pay the loan amount in full as soon as you can.

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