When to Use an Unsecured Loan?

Answer 1

To the consumer, an unsecured loan can be a great way to pay for relatively small items needed immediately. Whether it be a car repair, a vacation, or even a credit card, this type of credit is advantageous in that no collateral is necessary. The borrower's word is relied upon by the lender.

Of course, the caveat is that interest rates tend to be higher and terms tend to be stricter than those in secured loans. Thus, unsecured loans should be used for manageable sums. For the average consumer, it's a wise policy to reserve unsecured debt for important items that one can afford, but might not have the immediate cash for.