Unsecured Loans

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What is an unsecured loan?

An unsecured loan is a loan that does not require you to put up items you own, such as your car or home, as collateral to qualify for the loan. Approval for an unsecured loan typically requires an evaluation of your creditworthiness, income and ability to pay.

All personal loans from Marcus by Goldman Sachs® are unsecured, meaning they are no-collateral personal loans and don’t require you to put up your possessions to be approved for the loan. Marcus unsecured loans can be used for many kinds of expenses, including debt consolidation, a wedding or a big move.

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An unsecured loan is a loan that doesn’t require property to secure the loan, meaning you won’t need to pledge your house, your car or your prized possessions as collateral for the loan. Instead, an unsecured loan is typically granted on factors such as your creditworthiness and ability to pay. An unsecured loan may actually help you feel more secure because you know your possessions are safe and sound. Funny how that works.

Here’s what we’ll cover:

What are examples of unsecured loans?

Unsecured loans can be used for just about anything.  The personal loans we offer at Marcus by Goldman Sachs® can be used to pay down credit card debt, consolidate debt or to pay for things like a home renovation or a wedding.

Here are a few ways you can use a Marcus unsecured loan:

Debt consolidation  – Streamline the bills you already have. Instead of numerous payments, with Marcus you could have just one recurring monthly payment and a fixed interest rate.

Credit Card Consolidation  – Get out of the cycle of high-interest credit card debt. You could consolidate your debt into a single loan with a lower fixed rate. 

Home Improvement  - A home improvement loan is an unsecured loan that you can use for home improvements, repairs, remodels and renovations.

Vacations  – Fund your dream getaway with a Marcus unsecured loan. 

Weddings and Engagement Rings  – An unsecured loan can help cover your venue, decorations, honeymoon or almost anything else that comes along with wedding planning

Moving and Relocation  – An unsecured loan could help cover many aspects of your move, including storage, transportation and supplies.

What’s the difference between an unsecured and secured loan?

If you’ve been looking into personal loans, you’ve probably come across two major categories—secured and unsecured—and have been weighing the benefits of each.

Because there’s a lot more to choosing the type of loan you want than eye-catching details like interest rates and monthly payments, it can help to understand just what an unsecured loan is, what you can use the money for, and how it could be a helpful financial tool before making up your mind.

With secured loans, lenders require collateral—a valuable possession to secure or backup your loan.

The value matters because if you can’t pay a secured loan, the lender wants to know there is something they can sell as compensation. To determine the value of your collateral, lenders may ask you to get an appraisal.   

With unsecured loans, lenders don’t require you to put up items you own, such as your car or home, as collateral to qualify for the loan.

Other types of unsecured financing and how they compare

There are many kinds of financing, but Marcus personal loans have advantages. With a Marcus unsecured personal loan, there are no fees. You’ll always know exactly how much you owe each month for the term of your loan, and you won’t be charged any fees on top of what you already owe — only interest.

Let’s take a look at how personal loans compare to other types of financing.

Credit Cards

Credit cards are a way of borrowing money, though you don’t get a lump sum like you would with a personal loan. Once you have a credit card, you can use it to make purchases, but be mindful to make your payments on time and don’t exceed your credit limit. Credit cards can be useful if you need to make purchases on the go or right away.

Compared to personal loans, credit cards could have higher interest rates. Credit cards could also have variable interest rates. That means you could be spending more money to pay off your debt than you would with a personal loan that has a lower, fixed rate.

The minimum payment that a credit card company lets you pay can feel like a generous offer. However, if you only make the minimum payment, it can take a long time to pay off your bill. Typically, the longer it takes to pay off your credit card bill, the more interest you end up having to pay. And if you continue to make charges while you paying off your previous purchases, you end up paying even more in interest. With a fixed payment schedule and possibly a lower interest rate you could  end up paying less to pay off your debt.

This personal loan calculator shows how you may be able to save money if you consolidate your credit card debt and replace it with an unsecured personal loan from Marcus.

Peer-to-Peer Lending

People sometimes turn to peer-to-peer lending if they want to borrow money without a traditional bank or credit union. These online platforms offer funding by individuals and investors, rather than by a bank. People with money to spare can lend their cash to those who need it, earning interest in return. Online platforms match those who need to borrow with those who are willing to lend. If you borrow money through these forums, you could end up being financed by one or more individuals.

The benefit of peer-to-peer lending is that they sometimes have lower interest rates than borrowing options. On the other hand, their origination fees can range from 1% to 5% of the loan. That can really add up if you’re asking for a large sum of money.

What you should look for when researching loans

Once you decide to apply for a personal loan, there are some details to take into account in addition to the interest rate and how much you may pay each month.

Origination fees

Some lenders may charge a fee for providing the loan. The fees are typically a percentage of the amount you borrow and usually range from 1% to 5% of the loan amount. These fees are taken out up front, leaving you to walk away with less than you expected. For example, if a lender charged a 3% origination fee on a $10,000 loan, you would end up only receiving $9,700.

Late fees

If your lender charges late fees, you can end up paying additional amounts for missing a payment due date.

Prepayment fee

Some lenders may charge you a fee for paying off your loan early.

Fixed interest rate

A fixed interest rate means your rate stays the same month to month, which means the amount of money you pay every month does too.

Variable interest rate

A variable interest rates means your rate can change. It can go down. It can also go up. This fluctuation means you may not pay the same amount every month, and you could end up paying more in interest.

How to apply for an unsecured loan

Here’s where to start:

If you’re working with an online-only lender, you apply online.

Brick-and-mortar banks may ask you to come in, even if they offer online banking

Here are some typical personal loan requirements:

Social Security Number or Individual Tax ID number

A good credit score

Proof of income

Proof of identity

Bank account to deposit funds

The benefits of a Marcus unsecured loan

Marcus loans DO NOT have fees or unpredictable interest rates mentioned above.

You read that right. No sign-up fees. No late fees — you just pay interest for the additional days. No prepayment fees. No fees. Ever.

The amount you are approved for is the amount you receive. Marcus offers personal loans with rates as low as 6.99% APR — that's lower than most high-interest credit cards. Rates range from 6.99% to 24.99% APR, and loan terms range from 36 to 72 months. Only the most creditworthy applicants qualify for the lowest rates and the longest loan terms. Rates will generally be higher for longer-term loans. Learn more.

Also, your rate will never change for the life of your loan, meaning you’ll pay the same amount on your loan each month, instead of dealing with variable interest rates.

Pretty nice, huh?

What's next?

See if you qualify for a no-fee, fixed-rate unsecured loan today.

Loan Jargon, Debunked

The terminology behind loans and finances can sometimes be confusing. So to help, we’ve broken down some important terms for you to better understand the world of loans.

Loan Principal – This refers to the amount borrowed under the loan.

Interest Rate – The interest rate is the rate, expressed as a percentage, charged by a lender to a borrower for use of the loan amount.

APR – Annual percentage rate is the annual rate charged for borrowing. It is the combination of the interest rate and certain additional costs and fees.

Loan Term – The amount of time specified for the repayment of a loan. For example, a Marcus loan term ranges from 36 months to 72 months. A loan term should not be confused with the terms and conditions you agreed to upon taking out a loan.

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This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.