Understanding unsecured lending can help you make informed financial decisions.
Unlike secured loans, these loans don’t require collateral, making them a flexible option for borrowers. Instead, lenders approve these loans based on factors like creditworthiness, income, and financial history. This type of lending offers several advantages for individuals seeking financial flexibility. One key benefit is the ability to refinance high-interest credit card debt into a lower, fixed-rate payment through an unsecured personal loan. This strategy can lead to significant interest savings and more manageable monthly payments.
As of the fourth quarter of 2024, U.S. consumers held $1.21 trillion in credit card balances. For households carrying revolving credit card debt, the average balance was $10,563. Since credit card interest rates are typically higher than those of personal loans, refinancing into a lower-rate unsecured loan can be a smart financial move. This approach not only reduces the total interest paid over time but also simplifies debt management by consolidating multiple payments into one fixed monthly installment (NerdWallet).
Unsecured personal loans are also a great option for funding home improvement projects. Unlike secured loans, such as home equity loans, unsecured loans do not require using your property as collateral. Additionally, they often have shorter approval processes, allowing homeowners to access funds more quickly and start renovations sooner.
At LFCU, we’re here to guide you every step of the way. Our expert team will help you explore your options and secure the best loan to meet your financial needs. Plus, our rates are more competitive than those offered by many online lenders, making borrowing both cost-effective and stress-free.
Text our Lending Team at 906-341-3118 today to learn how we can help with your lending needs!
Cited Source:
NerdWallet. (2023). 2023 American Household Credit Card Debt Study. Retrieved from https://www.nerdwallet.com/article/finance/credit-card-debt.
