But what are guaranteed unsecured loans? Let’s break it down and look at it in parts. First, what are unsecured loans? Unsecured loans are loans that don’t require collateral, or "securities." When you’re taking out a secured loan, you’re offering the bank an alternative means of coming up with the money if you default on the loan. If you’re taking out an unsecured loan, on the other hand, the bank doesn’t have that option. That means they’ll charge you a higher interest rate to make up for the risk that they don’t get the loan back. If they make more money on the transaction, the lender will be much more willing to take that risk on you.
A guaranteed loan is one with a third party involved. If the borrower (in this case, you) defaults on the loan, a third party comes in and pays the difference. In many business cases, the initial borrower is your corporation, and the third party is you personally. This allows the bank a lot more security in lending to you, since they know that they’ll get the money one way or another.
Guaranteed unsecured loans, then, are loans that don’t require collateral, but will be paid back even if the borrower defaults on the loan. Taking out a guaranteed unsecured loan is a way of getting the same treatment from the bank that you would with a secured loan - but without having to put your property at risk. The advantage of this type of loan is that you don’t have to pay the high interest of an unsecured loan (because the bank knows it’ll get the money back,) and you won’t lose your property to the bank.
Of course, you will have to find a third party. In a business situation, this can be easy; your business is the borrower, the bank is the lender, and your personal account is the third party that guarantees the loan. In a more personal context, finding a third party can be a little trickier. While you might be able to convince Auntie Mae that you’re worth the risk, you might want to consider a guaranteed unsecured loan as more of a business setting than a personal one
