What is meant by Loans without collateral?

Many times it is necessary to finance the purchase of goods or necessities such as a car, motorcycle, dental expenses, a special trip, etc .. or face unexpected expenses unforeseen situations.

For this we use small loans in which the bank or brokers ask the borrower for granting certain requirements: to have payroll, fixed employment, etc., and also people who commit themselves as guarantors; this is called personal guarantees and may have the same person applying for the loan.

These personal loans have interest rates ranging around 9% currently, always depending on the characteristics of the loan and the guarantee presented.

But sometimes we find ourselves in certain circumstances where we are unable to present guarantees.

Why do some banks offer loans without collateral?

Loans without collateral loans are usually small amounts, from 600 to 6,000 euros, but may reach 60,000.

This type of financing without collateral is offered by all types of financial institutions, from traditional banking to companies that are advertised daily in the press and on TV as well as other small intermediaries companies located throughout Spain.

All we have to present is the D.N.I and the last payroll.

These loans, to be granted without collateral, have a very high-interest rate, which can reach 25% APR.

It is because of the high risks for the entity that supports very high rates of delinquency and default.

Despite these high-interest rates without collateral loans continue to look attractive, because many people are the only way to get the credit they need and also because they offer very fast processing; in 24 or 48 hours and you can get a response from the entity and whether the loan granted to proceed to deposit the amount into account.

Customers of unsecured loans are usually people between 30 and 55 years with a monthly income of between 700 and 1,500 euros.

Due to the special conditions of such loans should carefully examine the contracts signed to avoid surprises or complicated situations of default in the future.