If you have a situation where you need to borrow money for a particular occasion, e.g. a wedding, a vacation, maybe for personal expenses that cropped up, an unsecured loan is the perfect way to get the amount of money that you need in a hurry with instant approval and quick access to the funds.
With unsecured loans, they are given without any type of guarantor or collateral to back that the borrower will pay the funds back to the creditor. There is nothing for the creditor to come and take back if the borrower decides to default on the loan. It is granted strictly on the paperwork that is given at the time the loan is taken out and the strength of the person's credit worth. Examples of unsecured loans would be credit cards and personal loans.
With an unsecured loan, there are higher rates because the creditor is putting themselves at a greater risk for not being paid back. For example, the interest rates on credit cards are generally very high. This is an attempt to keep people from carrying a balance on the cards. They would prefer that folks pay the balance when the bill comes in each month.
Typically when you take out an unsecured loan, you should have a credit score upwards of mid six hundreds. You'll want to bring with you proof of residence, government issued ID, social security card, proof of income/pay stub, banking information/statements for a period of time depending on the loan institution.
Once the financial institution feels comfortable with you as a risk, they will give approval quickly and you will have the money in a very short period of time. This is especially nice if you're trying to consolidate debt and need to get it taken care of in a hurry.
Unsecured loans can be good if you use them properly to improve your credit utilisation percentage and also your credit score which, in turn, could lead you on the path to a secured loan for a bigger purchase if you see that in your future.