How can you find the cheapest unsecured loans? First you have to understand what cheapest and unsecured really means. Cheap mean the lowest fees and interest. Unsecured is talking about what asset (or lack there of) that you are putting up against the loan. So basically you are looking to find a loan which has the lowest fees and interest while requiring the least amount of asset as protection for the bank.

Many people believe that the best way to find the cheapest loan is to just find the lowest rate. While rate is part of the equation you cannot ignore the fees. Fees are really just interest that you are paying upfront when initiating the loan. Basically when you borrow money from a bank, you obviously have to pay back all of what you borrowed plus some profit for the bank. If there wasn’t any profit no banks would offer loans because they couldn’t make any money. That profit is the interest they charge you on the loan and the fees you pay up front. So you need to combine the total of all the interest in dollars that you are going to pay for the life of the loan and the fees you’ll pay up front. That is the number that you’ll want to compare between the loans you are considering to see which is really the cheapest.

Unsecured is talking about what asset (or lack of asset) that you have pledged against your loan, to the bank in case you for some reason can’t replay the loan. Think of a auto loan. If at some point you can no longer make the payments, the bank will come and take the car back. They then resell it can get their money back. A prime example of an unsecured loan is a credit card. While you should always repay your loans so that your can keep a clean credit report, if for some reason you can’t replay your credit card loan there isn’t anything the bank can take away from you to resell. That’s why the interest rate on credit cards is typically very high.

So depending on what you’ll need your loan for and how large it is, if your main goal it to have an unsecured loan then a credit card would be the way to go if you can get approved for one with a high enough credit line. Keep in mind this may not be the cheapest because the rates on credit cards are so high. You’ll need to balance out what you are willing or required to secure you loan with so that you can keep the interest and fees the cheapest. Typically when it comes to unsecured loans, cheapest is the best.