Function

• Non-collateral loans are available from banks, credit unions and cash advance lenders. Unlike other types of loans that require collateral, people who apply for non-collateral loans do not have to provide a vehicle title or other security. They can walk into a lender's office, complete and submit an application, and based on the information provided, lenders determine whether the individual is a candidate for a non-collateral loan.
  
  

Types

• There are two types of non-collateral loans. The first type of loan is available from traditional lenders such as a bank or credit union. Borrowers don't need collateral, but lenders do require an excellent credit history and acceptable income. Persons who can't qualify for a traditional non-collateral loan can contact a payday or cash advance loan company. These non-collateral loans offer easy approvals. However, they also feature high finance fees and short loan terms.
  
  

Features

• Non-collateral loans offered by a bank or credit union feature adjustable or fixed rates. Adjustable rates are risky because the interest on the loan can fluctuate on a monthly or annual basis. Hence, loan payments tend to rise and fall. On the other hand, a fixed rate non-collateral loan features non-changing monthly payments, which is better suited for borrowers who prefer predictable payments. If applying for a non-collateral payday loan, borrowers have to repay the money within two weeks, and these loans typically feature finance fees that range from $15 to $30 per every $100.
  
  

Benefits

• Non-collateral bank loans benefit borrowers with an excellent credit history and no collateral. These individuals have an impeccable credit history. Thus, lenders are prepared to offer no-collateral loans. To qualify for such loans, the majority of lenders require a minimum credit score between 700 and 750. Individuals who meet this requirement can obtain cash to pay an emergency expense such as a car repair, debt consolidation or home improvement. Non-collateral cash advance loans are beneficial because they're available to persons with bad credit, no credit and no co-signer.
  
  

Warning

• Although non-collateral bank loans are only available to persons with good credit, the interest rate on these loans is higher than collateral-based loans. Yet, the interest is often lower than the average credit card, which is why a non-collateral loan is ideal for debt consolidation. Higher interest rates equal higher monthly payments. Before accepting a non-collateral loan, borrowers have to assess their personal finances and determine whether they can afford a new monthly expense.