The idea that $50,000 unsecured personal loans are impossible with bad credit is not accurate. Several factors come into play, not just credit history and understanding these aspects is key.
When it comes to seeking large loans with bad credit, there is no harm in believing that the chances of approval are not great. After all, for most lenders the risk in granting a $50,000 unsecured personal loan, for example, is a little too high for comfort. But with the right boxes ticked, it is hard not to get the green light.
The reason these large loans can be so accessible is that basic criteria is just the start. Lenders look for more information before considering to grant approval with bad credit a factor. If they feel they can trust the borrower, the chances are good.
Of course, convincing lenders is not just a simple matter of meeting strict lending criteria. But with some careful preparation, large unsecured personal loans can get the green light. Whether approaching traditional or online lenders, some compromises may have to be made.
Why Credit History Is Not The Decisive Factor
It is easy to assume that the chief obstacle to getting something like a $50,000 unsecured personal loan is poor credit history. The truth is that a credit history has nothing more than an influence over what interest rate to charge, but in terms of approval, it is not the decisive factor.
The confusion is understandable. With a low credit score the interest rate to be charged will be high, increasing the cost of the loan too. For example, a score of 600 is considered quite low, and the interest to be charged will be higher than if the score was a healthy 700. On the other hand, a very poor score of 450 would mean a higher rate again.
But, loan approval with bad credit is possible if the actual monthly repayment sum is affordable when the income is taken into account. While it is true that on a large unsecured personal loan, the interest could mount up, making the repayment $700 monthly, if the available income is $1,500, there will be little issue.
Reducing the Monthly Payments
A key secret to getting approval is to reduce the size of the monthly repayments. This makes the whole debt affordable, and can mean a huge difference to getting a loan with bad credit, especially a $50,000 unsecured personal loan. The term of the loan is the central factor to this.
Because the principal of the loan is divided up over the term of the loan, the longer the term the smaller the monthly share. For example, with a $50,000 loan over 5 years, the principal is divided by 60 month ($833), but if the loan term is 7 years, then the principal is divided by 84 months ($595). The difference can make approval with bad credit likely.
But for these large unsecured personal loans, it is necessary to accept the larger sum of interest paid over the loan term.
Finding the Right Lender
Another key factor, of course, is finding the right lender. A $50,000 unsecured personal loan is not going to be handed out to applicants with bad credit without some kind of assurance.
Traditional lenders are especially strict, but online lenders are less interested in low credit scores. This is usually because an online lender is a subprime lender and expert in lending to people with poor credit histories.
What this means is that, getting loan approval with bad credit is more likely. Even with large unsecured personal loans, these lenders have a greater level of flexibility with bad credit applicants, particularly with regards to the repayment schedules.