Many a times, financial crisis makes itdifficult for the life cycle to move smoothly. This is the time whenwe look for loans. We can either pledge our house and get therequired loan amount and repay it in monthly installments. But, whatif we don't possess a home or don't want to risk it? In these events,unsecured loans are the most viable options. These loans give theborrower the liberty to raise funds without placing any security. Unsecured loans are not guaranteed with any asset, so the risk ofrepossession doesn't exist. Though, the lender can still take a legalaction and sue the borrower in the court of low, in case he defaultson the repayments. Unsecured loans are more expensive than theirsecured counterpart because it has greater risk for the lender.

Unsecured loansessentially have the features cited below.

• Thesum of money granted by the lending institution is not secured byany collateral
• Thelender gives the loan solely on the basis of credit worthiness ofthe borrower
• Thelender conducts a thorough credit check to evaluate the payingability of the borrower by scrutinisinghis past records
• Theloan amount can vary anywhere in between 500 to 25,000 pounds.
• Theloan tenure ranges from 6 months to 10 years
• Therate of interest is higher than the secured loans because the lendercompensates for the risk involved for him
• Theprocessing of unsecured loans is quick because of the elimination oflegal formalities concerning property evaluation etc.
• Unsecuredloans call for less documentation since property papers are notinvolved
• Incase of default on repayment, the lender can sue the borrower in thecourt and a CCJ (Country court judgment) may be issued against theborrower.