Unsecured Loans are also known as personal loans. They are issued to individuals based on their creditworthiness and without the need of security.
What are Unsecured Loans?
Unsecured loans are loans issued to individuals for personal use without the need of collateral or security like cars, Land, e.t.c. They can be issued by Banks or any other lending institution.
They can be borrowed for personal use like Emergency, House Shopping, Travel, Wedding, Family expenses e.t.c
Types of Unsecured Loans
There are two types of unsecured loans. There those issued by Banks for individuals who are employed and those issued by Mobile Lending Apps to anyone.
You can check our list of Mobile Loan Apps and Unsecured Bank Loans.
Unsecured Mobile App Loans
These are the most popular in Kenya because they do not require signing of any physical document. All you have to do is download a mobile loan app. The app will then scan your device to determine whether you qualify for the loan: Learn how mobile lending apps calculate your credit score.
If you qualify for the loan, you will be issued via mpesa minutes after downloading the app. Everything is done online.
- They are issued quickly
- No employment record needed
- No initial fees
- Low loans ( about Kenya shilling 1,000 to 50,000)
- Short repayment period (1 month)
Unsecured Bank Loans
These are loans which are normally issued to employed persons. You have to provide your pay slip. You also have to sign some form before the loan is disbursed.
- High Loans (Ksh. 20,000 to 4,000,000) depending on you credit risk
- Long repayment period (1 to 4 years)
- You have to have a bank account with the borrowing bank for a minimum of about 3 months
- Fees are high (learn more about some of unsecured bank loans fees)
- Almost all unsecured bank loans will need you to be employed before being issued a personal loan
- High Interest Rates: Putting together all the factors and fees, the interest rates for bank unsecured loans can skyrocket to 27%.
Photo Credit: Kenya Bankers Association