An unsecured loan is a loan not backed by collateral like a car or house. Lenders use your credit history to decide whether you qualify for an unsecured loan and, if so, what interest rates you'll get. We've pulled together the best unsecured loans to help you find the right loan for you.
Credit Criteria
Usually, a minimum credit score of 550 or higher is required to qualify for a hard money loan. However, some lenders may be more lenient and even provide financing to borrowers with a score as low as 500.
Unsecured loans include personal loans, student loans, and most credit cards—all of which can be revolving or term loans. A revolving loan is a loan that has a credit limit that can be spent, repaid, and spent again. Examples of revolving unsecured loans include credit cards and personal lines of credit.
Hard money loans are short-term loans backed by a collateral asset, typically some form of real estate. They are funded by a private investor rather than depositors at a banking institution. The private funding nature of the money provides lenders with more flexibility in deciding which loans to approve or deny.
Your lender may ask you to provide a down payment of 10% to 30% (or more) on your hard money loan. Generally, the stronger your credit and financial qualifications, the less of a down payment you'll need to provide. However, a larger down payment may help you access better rates and terms.
Hard money loans typically require property as collateral. If you have commercial real estate with equity available, you may be able to use that to refinance a different type of loan.
An unsecured loan is a loan that doesn't require collateral, like a house or car, for approval. Instead, lenders issue this type of personal loan based on information about you, like your credit history, income and outstanding debts.
Unsecured personal loans have no collateral requirements and are solely based on the borrower's creditworthiness, income and financial stability.
Cash out and refinance loans can be funded in as few as 3-5 days for investment property while owner occupied hard money loans take 2.5-3 weeks due to current federal regulations.
These loans are quick and easy to arrange and have high loan-to-value (LTV) ratios, but also high interest rates.
This means that the investor must already have a property in mind if they want to be “preapproved” for funding. Once a hard money lender analyzes and approves the property deal, they will provide a Proof of Funds letter which will allow the investor to purchase the property with financial backing by the lender.
You may be able to get a personal loan without income verification if you pledge collateral, use a co-signer or have an excellent credit score. There are several ways to get approved for a personal loan with no proof of income, including applying with a co-signer and securing the loan with collateral.
Hardship personal loans are a type of personal loan intended to help borrowers overcome financial difficulties such as job loss, medical emergencies, or home repairs. Hardship personal loan programs are often offered by small banks and credit unions.
Non-Transferable Assets: Assets that are legally restricted from being transferred, such as government benefits, social security payments, or certain insurance policies, cannot be used as collateral since they cannot be seized or sold.
An unsecured loan requires no collateral, though you are still charged interest and sometimes fees. Student loans, personal loans and credit cards are all example of unsecured loans.
Bank loans
Some banks offer unsecured financing through business lines of credit or term loans, with amounts that can range from $5,000 to $150,000. Term loans offer an upfront lump sum of money, while business lines of credit only require you to pay interest on the money you borrow, up to a preset limit.
No collateral required - Unlike secured loans that require assets like your house or car as security, unsecured loans don't need collateral. Not only does this make the application process easier, but it also means you won't risk losing valuable possessions if you can't repay the loan.
In order to offer a fast closing time, hard money lenders typically don't look into your credit history. They mainly base the loan amount on the collateral's value. You'll also likely be limited to a 65% to 75% loan-to-value (LTV) ratio — the lender wants to limit its risk in case you default.
Don't require a strong credit history: You don't need a good credit score or loads of financial documentation to get a hard money loan. While traditional mortgage underwriting focuses on borrower income and credit history, hard money lenders extend loans based on collateral, such as a house or building.
In order to accomplish those goals, hard money loans are structured differently than traditional mortgages. Current hard money loan rates, as of 2021, vary between about 7.5% and 15%. Every hard money lender, however, offers slightly different rates and fees.
Unlike a traditional home mortgage, hard money lenders typically only charge interest on a monthly basis, which means you don't actually pay any money toward the principal loan amount at each monthly payment cycle. However, you will have to pay back the full principal amount at the end of the loan's life cycle.