Over the years, payment cards have become an integral part of our lives, as they are easy to get and convenient to use. The booming credit card industry is virtually brimming with card options and offers. For mutual benefits, many multi-nationals too have come up with affiliate cards.
However, payment cards have two major drawbacks that have remained unobserved for years - very high interest rates and restricted amount, leading to multiple cards and multiple high interest card debts.
Market report shows that borrowers are slowly but surely realising that multiple card debts prove to be more costly, as they have high interest rates. As a result, the demand for unsecured personal loan is on a rise in the UK credit market.
Another reason for its growing popularity is its ?no collateral' attribute. An unsecured loan can be availed without pledging collateral against the loan amount.
As a result, this loan type can be availed by any UK resident over 18 years of age - tenants, homeowners, property owners and students as well - subject to the lender's credit policy, and the borrower's credit history, employment status and debt to income ratio (DTI = Debts/Income).
The no collateral attribute of unsecured loan type leads to benefits like no time-consuming property evaluation procedure leading to less paperwork and quick loan approval. It also ensures that repeated defaults or non-payment will not lead to repossession of a valuable asset.
Every credit alternative has shortcomings. Unsecured personal loan is no different. Limited credit range (typically between £500 and 25,000), high interest rates (typically between 7.9% and 41%), fixed rate plan and payback option, and non-negotiable loan terms and conditions - are its drawbacks.
In nutshell, unsecured personal loan is a credit option that is much cheaper than payment cards and more feasible than secured credit.
About The Author: The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in business administration and is currently assisting Go4UKLoans as a finance specialist.
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