Unsecured loans marketed specifically for home improvement are a relatively recent option. Many of the current lenders started making these loans after the home market collapsed nearly a decade ago, leaving many homeowners with less (or negative) equity.
Unsecured personal loans don’t require equity as collateral. But healthy credit is a must. If you’re working with a reputable lender, it also will want to see that your income is high enough and your debt load is low enough that you can easily afford those monthly payments. If you’re smart, that’s your goal, too.
If you’re considering an unsecured home improvement loan. Here are 6 points to ponder.
- Unsecured loans come in lower dollar amounts.
- Loan terms are usually shorter.
- They are quick to obtain, often no start-up fees.
- You may pay higher interest rates without collateral.
- Unsecured borrowers need good credit.
- It pays to shop carefully before applying.