Bad credit? Here is how you can consider unsecured loans as your preferred choice!
It is obvious that for anyone with a low credit score, a large loan from any bank or financial institution is next to impossible. However- this rule is not as rigid as it sounds. We live in a world where opportunities are abound, and for someone with a bad credit, there are still many ways to legitimately secure a large loan, and one of the most common methods is getting unsecured loans from Licensed Money Lender.
While unsecured loans may sound like a simple process, a borrower should be aware of a few things before going in for one of these. Since they come with a greater risk for the Money Lender, the rate of interest is also considerably high. Here are some of the points to be kept in mind about unsecured loans:
The important factors
For an applicant, submitting an effective application is more possible when he or she knows what the lender is trying to find. The first thing that your application should ensure the lender off is that you have sufficient income to stick to the repayment schedule. With that taken care of, there are not many reasons left for the moneylender to reject your application.
Even in unsecured loans, your income coupled together with your debt to income ratio will be the primary deciding factor. Despite of having a steady job with a high income, you still need to show that you have sufficient income after all your expenditures to pay back your loan. Lastly, the purpose of the loan also matters. A lender needs to know that the loan being provided will be used judiciously- and is not being taken for supporting a lifestyle.
Having a cosigner- why is it important
The issue with unsecured loans is that the lender has nothing else apart from the borrower’s income and word to believe in while handing out a loan. Especially for large amounts and poor credit history, this may not be enough. This problem can be taken care of by having a cosigner for your loan- for he or she provides the guarantee to the lender that his money will be repaid under any circumstance.
With a cosigner legally obliged to cover the repayments in case the borrower cannot do so, the lender is safe and should not need any other assurances to approve the loan. However- in such cases, a cosigner for large unsecured loans will need to come with a high credit rating and large income apart from an impeccable record, to prove that payments will be taken care of.
The approvals process
Unsecured loans for borrowers with a bad credit history cannot be approved as quickly, for the lender has to be careful while granting this. Unsecured loans for a candidate with a low credit score is only given if he or she meets a specified criterion. This is true for any kind of lender, though the exact criteria may have some variations. Thus, it is important for you to be informed and realistic as you go on to get an unsecured loan for a considerable amount![/fusion_text]