unsecured personal loans

In recent times, the need for quick, short-term loans has risen drastically around the world for many reasons. The global economic situation has become extremely volatile, leaving people scrambling around to borrow money for unexpected expenses. Coupled with the advancements in technology and the doors they opened in terms of access to financial services for a previously-neglected market segment, more and more people started looking for credit facilities that allowed low-value, short-term loans from trusted lenders. Hence, the popularity and availability of unsecured personal loans started rising.

 What are Unsecured Loans?

Unsecured loans are any type of credit facility that doesn’t require the borrower to pledge any of their assets as collateral or provide guarantors(s), which the lender can utilise to recover their money in case the borrower is unable to meet the terms of the loan. In these kinds of loans, the risk is entirely on the lender, hence the interest rates and service charges tend to be on the higher side.

 Unsecured loans come in various shapes and forms.

 Payday Loans / Salary Advances

The most common form, salary advances are when people borrow small sums of money to be repaid on the date they receive their next salary.

 Medical Loans

Quick loans that allow the full settlement of any medical bills which can later be settled through flexible instalment plans.

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 Business Loans

Investments to first-time or formerly-failed entrepreneurs who find it difficult to get business loans from banks due to poor credit histories.

Personal Loans

Unsecured loans to be used for any other purpose of the borrower’s choosing.

In recent times, unsecured loans have got a somewhat bad reputation of being debt traps and generally coming with many caveats such as difficult-to-understand terms and conditions containing hidden charges. This has been due to the previous lack of financial regulation within this industry that allowed many predatory lenders to take advantage of desperate people, as well as people generally tending to not read the terms and conditions thoroughly prior to signing them.

However, there are many benefits of unsecured loans as well, that are rarely talked-about.


One of the main benefits of unsecured loans is that they are reliable, which means that unless you have an abysmal credit history with multiple defaulted loans in the past, the chances are high that your request for money will get approved. If you have borrowed money in the past with a particular lender, your future loans will get approved even faster. This makes it extremely reliable in case of an emergency when you need money and are left with no other avenue to borrow from your friends.


As your request for an unsecured loan is judged based purely on your past credit history, lenders are able to approve/reject applications within a matter of minutes. Furthermore, unsecured loans don’t require extensive documentation unlike normal loans; most often, lenders only require a photo of yourself and proof of identity (basically, a selfie and a quick snap of your NIC). Nowadays, borrowers can get their required loan in as short a time as thirty minutes. This makes unsecured loans ideal for when you need money urgently.

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Due to technological advancements, the popularity of unsecured loans in the form of online loans have skyrocketed. People can now borrow money through their mobile phones or computers, using the lender’s website or mobile app, which means they can apply for loans without even having to leave their homes. This also allows millions of people who live far away from cities or those who don’t have easy access to transport to borrow money easily, making it a huge step in the world of finance.


Unsecured loans are, by nature, meant to be ideal for emergency situations which means that they are, by nature, easy to navigate. Even first-time borrowers or those who are not tech-savvy can easily complete the process by themselves. Most transactions can be completed with just a few clicks of the mouse or taps on the mobile. Lenders further facilitate this by having clear step-by-step instructions in multiple languages freely available on their website.


The best part about borrowing money from a third party money lender is that you don’t need to turn to friends and family with requests for money, thereby alerting your entire social circle to your current financial status. When taking out unsecured loans from smaller, private entities, discretion is virtually guaranteed and you can ensure that your privacy is protected.


Unlike in the past, the online lending ecosystem has grown to become a strong industry with government regulations covering its activities. This means that unethical lenders can no longer monopolise money lending which has led to many trustworthy, prestigious firms being incorporated and becoming strong players. There is a general push towards establishment of trustworthy money-lending entities with many newer players focusing on transparency, data security and ethical business practices.

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In an effort to combat the reputation damage done to the industry in the past, most entities in the unsecured loans industry are focusing on transparency, helping customers understand how the business works, as well as any potential pitfalls. Companies like https://www.oncredit.lk are steadfastly seeking to educate their customers about the terms and conditions of their loan services by not only having them displayed prominently on the website as well as each step of the loan process, but also by having them translated into different languages.


As most unsecured lending facilities rely on the internet for transactions and data storage, data security is one of the most critical areas of focus for most companies. They utilise various data security mechanisms such as two-factor authentication for account creation and log-ins, encryptions, backup and recovery systems, tokenization, as well as adhering to general data security best practices in order to ensure the complete security of their users’ confidential personal and financial data.

 Lower Interest Rates

While unsecured loans tend to have higher interest rates than secured loans, online money lenders have managed to offer their services at lower interest rates than other unsecured loan companies due to the lower overhead costs (e.g. no physical branches, premises maintenance cost, reduced utilities, less staff required etc.). Customers happily reap even more benefits of the virtualisation of money lending.

While unsecured loans come with their own set of unique benefits, there are many dangers of overly-relying on unsecured loans for additional income. However, most of these dangers can be avoided by selecting a trustworthy service provider, exercising self control and generally using a little bit of common sense.


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