Unsecured loans or often referred to as unsecured loans are individual loans without any collateral to be registered by the debtor. But there are still many customers who do not know the ins and outs of Unsecured Loans clearly. Let’s see what are the most frequently asked questions for credit without collateral.
What is Unsecured Loans?
Unsecured Loans is a loan product from a bank that does not require the debtor to pledge an asset. Unsecured loans are usually used for customers who are in need of some quick funds and although without a guarantee, that does not mean there is no requirement to be met.
So what are the terms of Unsecured Loans? What are the advantages and disadvantages? My finance will answer frequently asked questions for credit without collateral.
What are the Benefits of Unsecured Loans Compared to Other Credits?
Different from some other types of credits, you can use Unsecured Loans loans for any needs. Unsecured loans are generally used for consumer needs that require quick funds, among others:
What is a Debt Ratio?
If you borrow some money from the bank, then the bank will take into account the debt ratio. The bank uses these ratios to measure the financial capacity of the prospective borrower.
Debt ratio is the ratio of income per month to the current credit installment. Debt ratio determined by the bank usually does not exceed 30%, this is done to anticipate bad credit.
Why is the bigger the debt ratio getting worse? Because if the ratio is more inclined to debt, then you can be sure you will be difficult to meet the needs of life.
How to Payment?
Generally the bank has provided several methods that allow you to make payments Unsecured Loans, some of the ways include:
Mobile banking or internet banking
Auto debit from debtor account
In addition to the method of payment, the bank also provides the flexibility of payment where you can pay a fixed amount with a flat rate or pay the amount in accordance with your ability to meet some terms and conditions of the bank.
What is the Difference of Fixed Interest with Floating Interest?
Fixed interest rate (fixed rate) is a fixed interest rate within a certain period while floating rate (floating rate) is a market-dependent interest rate that is fluctuative. Banks often combine the two, but in fact both have advantages and disadvantages of each.
How to Calculate Interest in Unsecured Loans?
Three types of interest calculations for loan products such as Unsecured Loans are:
Fixed Rate. The calculation of interest where the major installments, flowers, and principal installments are the same each month.
Effective Interest Rate. The interest calculation will be done at the end of the installment period, in which the interest will be calculated from the credit balance every month. The value of the longer the smaller the interest because the principal amount will decrease every month.
Interest Rate of Annuity. Is a modification of the effective interest rate calculation in which monthly installments will be the same but the composition of interest and principal installment change every period.