Applying for unsecured loans is a nerve-wracking experience, with the wait for approval torturous. But the chances of a favorable outcome are improved if three simple steps are followed.
The need for extra funds is arguably greater today than it has been for quite some time. For many of us with financial worries, a loan can provide the cash injection to clear a backlog of utility bills, alleviate credit card debt and help to reduce the existing loan debt. The problem is getting unsecured loans when bad credit is part of the equation.
It will come as good news then to learn getting such loans approved without security is not necessarily a problem at all. All that is needed is for the application to tick all of the boxes and the documentation to be in proper order. Once that is achieved then the other elements tend to fall into place. After all, lenders need to lend if they are to make their profits.
Admittedly though, there is more to it than that. While chances of getting a guaranteed loan, despite no security, are not as long as might have been thought, there is a chance of failure. But by following these three simple steps, your chances of seeing your application succeed are increased dramatically.
The first step is to be realistic in what unsecured loan should be applied for. The mechanics of such loans has it that no collateral is provided as security against the value of the loan borrowed. From the point of view of the lender, the risk of losing money is increased since there is no compensation available to them should the borrower default on the loan.
It is unrealistic, therefore, to expect to get large loans approved without security. Applying for a $10,000 loan is more likely to fail when there is no collateral than a $5,000 loan. This is because the only indication that monthly repayments will be made is the income that the borrower has. And with a debt-to-income ratio of 40:60 usually applied, the criteria is quite narrow.
So, to get closest to a guaranteed loan, despite no security, be sure to know what your budget really is before filling in the application form.
Know Your Loan Options
Applying for an unsecured loan from a traditional lender is almost certain to end in disappointment if bad credit scores are a factor. This is because traditional lenders tend not to like to face the kind of risks that bad credit suggests.
There are loan options available that are more suited to bad credit borrowers, and it is more likely to get loans approved without security with the lenders that offer such loan products. As alternatives to banks, online lenders are a common option, boasting lower interest rates, as well as better terms and conditions in general.
Another are employer-based loans, which are basically cash advances from your employer taken against upcoming pay checks. This can often be the fastest and most prudent option as, depending on how long your employment as been, an employer can provide a guaranteed loan despite bad credit.
Finally, the third alternative to seeking unsecured loans from banks is to approach family or friends. These are likely to have no interest attached to them, and provide a fast solution to money problems.
Take Time to Choose Your Lender
It is never wise to choose the first offer made. The fact is that loans approved without security have risks for the borrower as much as the lender, so it is important to check the lender out. This is especially true when it is an online lender. It may be tempting to accept a guaranteed loan despite bad credit, but people have been caught out by high administration fees, hidden charges and crippling penalties.
So, before signing up to an unsecured loan agreement, read the small print carefully and check the lender out with the Better Business Bureau.