When taking out a loan, collateral is almost always requested. This requires the lender to be sure that they will get back the borrowed money with interest. If you can not cough up this money, they can use your collateral as credit. This happens for example when taking out mortgages on houses or with major renovations. However, there are a number of loans for which no collateral is requested. Do you want to borrow money without collateral, but don’t know where to start? We like to help you!
When to borrow money without collateral?
Some specific loans do not require collateral. Consider for example a loan for a car. In that case you can often take out a loan with the garage owner. The relevant car then acts as collateral. Please note that the term of your loan is shorter than the life of the car. Otherwise, you still pay years after you have exchanged the car for that loan. That is simply not realistic. In general we can say that borrowing money without collateral is only possible with personal loans.
Borrow Money Without Collateral
This usually concerns relatively small loans, amounts to around thirty thousand. Although the lender does not ask for any collateral, he will still check your financial past. If the creditworthiness is good, the bank will probably offer you a loan at a lower interest rate. Almost 85% of loans without collateral are rejected on the basis of creditworthiness!
Banks where you can borrow money without collateral
There are various lenders, who are known to easily lend money without collateral. This often happens, for example, at special entrepreneurial banks that state that the entrepreneurs themselves know very well what is good for their business, says Biznir. Personal loans are sometimes taken out abroad. Here they will be less likely to track your financial past. However, count on questions such as: “why don’t you borrow in your own country?” So you have to come up with a good story.