What is an Unsecured Loan?
Are you dreaming of updating your kitchen, expanding your home’s square footage, or improving an outdated bathroom? If so, you may be wondering the best way to pay for the project. Home improvements can be costly, but the payoff will be priceless. You’ll be able to enjoy your home even more than you already do, as well as increase the value of your home if you ever decide to move.
Home Improvement Loans
One of the best ways to pay for a home improvement project is with an unsecured loan. This is a type of personal loan that doesn’t require any collateral. An unsecured home improvement loan is specifically meant for home projects like kitchen remodels, increasing home efficiency, or adding a deck to the yard.
How Do Unsecured Loans Work?
All unsecured loans come with an interest rate, repayment period, and other terms that will depend on your financial situation and the lender. For example, if you have a high credit score, you’ll likely pay less interest than someone with a lower credit score.
Once the repayment period and interest rate are set, you’ll be required to pay a monthly minimum to pay off the loan. The longer it takes to pay off the loan, the more you’ll pay in interest over time.
Choosing a Lender
Choose your lender carefully. Look for a lender offering flexible payment plans, and avoid lenders that give penalties before payment. With some research, you can easily find a lender that offers a variety of unsecured home improvement loan programs to meet your needs.
What Do You Need to Get an Unsecured Loan?
Not everyone can obtain unsecured home loans. Here are a few things you’ll need in order to apply and get access to an unsecured home improvement loan:
1. High Credit Score
A home equity loan or other loan options do not require a high credit score, but an unsecured loan does. Because the loan does not require any collateral, you need to show evidence that you can be trusted to make the monthly payments. A high credit score is usually considered to be above 700.
2. Steady Income
You’ll need to prove that you have a steady income in order to be eligible for an unsecured loan. The higher your salary and the more secure your job, the more easily you’ll be able to obtain this type of loan.
3. Pay Stubs and Other Required Documents
Pay stubs are one of the most reliable ways to prove your income, so you’ll need to provide your most recent stubs with your loan application. Other required documents vary by lender, but you’ll most likely be asked to show your W-2 and proof of identity.
Making the Right Choice For You
Educate yourself on the differences between secured and unsecured home loans before you jump into any loan applications. It’s important to know your options and choose the right loan for your situation. If you have a high credit score and steady income, unsecured home improvement loan programs could be a great choice for you.