Unsecured loans ? a sub-type of personal loans ?are availed without pledging something valuable against the loanamount. Market study confirms that more and more people are optingfor unsecured loans over other credit options like payment cards. So,what are the reasons behind its growing appeal?

Payment cards ? Credit Cards/Cash Cards/StoreCards

Payment cards are popular because they are easy toget and convenient to use. Due to attractive offers and benefits fromnumerous card companies and multi-nationals, most of us have got intothe habit of keeping multiple cards.

However, payment cards have two major drawbacksthat have remained ignored for years ? very high interest rates andrestricted amount, which in most cases leads to multiple cards andmultiple high interest card debts.

?Less expensive than payment cards

From the above-mentioned comparison of advantagesand disadvantages, it is clear that payment cards are very expensive.Hence, more and more people are switching to unsecured credit forsmall and urgent monetary requirements.

Unsecured personal loans arethe best alternative for people who are unwilling to get intoproperty related legalities and risk their property for a smallamount (homeowners and property owners), and the only alternative forpeople who do not own any valuable asset to pledge (tenants andstudents).

The?pros? of availing unsecured loans are: no collateral, credit forall (tenants, homeowners, property owners and students as well), notime-consuming property evaluation procedure, less paperwork, quickloan approval and no repossession threat (in case the borrower failsto payback).

The ?cons? of availing unsecured loans are:limited credit range (typically between ?500 and 25,000), highinterest rates (typically between 7.9% and 41%), fixed rate plan andpayback option, and preset loan terms and conditions.

Please note: To avail thebenefits of unsecured personal loans, the applicant must be a UKresident and over 18 years of age. Also, the approval of the loanamount is subject to the lender's credit policy, and in proportionto the borrower's credit history and debt to income ratio (DTI =Debts/Income).