In the growing world, with the growing needs of individuals, the need to have instant access to funds is essential. The need for which can arise anytime and anywhere- whether to meet immediate medical expenses, sudden home or car repair or meet an urgent family event. There are 2 ways to have instant access to financing and solve unexpected needs of the individuals:
A. Obtaining a Loan with Collateral
B. Loan without Collateral
What if there are faster, more convenient and easy ways to secure funds and that too without providing a collateral? Yes, you read that right! You can instantly get a short-term Personal Loan that is quick to get credited into your bank account and requires less paperwork. This blog will thoroughly focus on the concept of collateral-free loans, how it works, and how these loans are beneficial in the financial sector.
What is a Collateral-Free Loan?
As the name suggests, a collateral-free loan is a borrowing that does not require collateral. Instead of valuables, this loan is approved based on your financial statements and creditworthiness. It is also referred to as an unsecured loan available for salaried young individuals.
How do Collateral-Free Loans work?
While applying for a Collateral-Free Loan, the lender evaluates the creditworthiness of the borrower. They monitor and verify the financial and repayment ability of the borrower, rather than asking for a collateral. At the very first, the credit score is checked, that reflects the past behaviour of the borrower and how responsible the borrower is towards debt management. A high credit score indicates that the borrower is responsible enough to get easy loan approval. Other than credit score, lenders often anaylze income stability, bank statements, salary slips and other personal information to provide the loan. By highlighting the following criteria, lenders effectively know the entire scenario of the borrower, thereby providing a loan without Collateral.
How Collateral Free loans are beneficial for the borrowers?
A Collateral Free loan is a lifeline for several borrowers who do not have a valuable asset to mortgage against the borrowed fund. Here are some of the other reasons that make Collateral Free loans even more beneficial:
No Risk of Valuables:
Since there is no role of collateral, you are worry-free about losing your valuable assets. You can get funded without the need to submit your valuables to avail of a loan.
Quick Loan Application Process:
Since collateral submission is not involved, less documents are required by the lender to provide a loan to you. Hence, leading to quick approval.
Easily Accessible:
Since all the borrowers do not have valuable assets like property or gold to provide as a mortgage, these loans are available for a wide range of borrowers.
Flexibility of use:
You have the complete freedom to use this loan as and when needed. This loan can be used for personal or business purposes.
Improves Credit Score:
Timely repayment of these loans helps improve your credit score. Improvised credit scores will help you fetch good loan deals in the future.
Flexible Repayment:
Repayment tenure of collateral free loans is more flexible than other loans. You can choose the repayment structure as per your income schedule.
Collateral Free Loan in a nutshell!
This blog has provided some crucial insights regarding collateral-free loans. Now that you have this critical information about collateral-free loans, regarding its concepts, workings, benefits, and features, you can make a more sound decision about your next loan purchase.
If you are thinking of availing a collateral-free personal loan, you can visit Lenditt’s official website or Lenditt Loan App to support your financials with our loan products. We provide collateral-free loans to young salaried professionals with stable monthly income and self-employed individuals. Within minutes the loan amount is approved and disbursed directly into your bank account.
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