Credit verification is standing in your way? You cannot get financing due to the lack of proper credit? You would be surprised at how much people is currently in your same situation. Under these circumstances, the smartest way to go is to resort to a secured loan. However, not everybody is a homeowner. Yet, the good news is that there are lenders offering bad credit unsecured loans which require no collateral and are approved regardless of your credit score or history.
The Lack of Security
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The lack of security is one of the main features of these loans. People with credit difficulties tend to have problems obtaining finance and though secured loans are easier to qualify for as they have less harsh requirements, ownership is rarely a characteristic of bad credit borrowers. Therefore, the fact that these loans require no collateral to be approved is a very attractive attribute.
But even those who have a property may not be able to use it as collateral for the loan. Mortgage loans are increasingly difficult to pay off and therefore, home equity creation has become slower which in turn hinders the ability of borrowers to obtain secured loans of high amounts (the amount limit on secured loans is the amount of available equity on the property being used as security). In such situations unsecured loans will be of great aid.
Bad Credit Approval
Now that the lack of collateral obstacle has been solved, there is still another obstacle which needs to be addressed: bad credit. A low credit history can hinder loan approval for many loan types because the risk that a low score represents scares lenders away. However, there are loan specially designed for people going through credit difficulties that can be easily qualified for.
Of course, the interest rate charged on these loans will be significantly higher than that of unsecured loans for people with good credit. Nevertheless, the loan payment can remain affordable by extending the repayment schedule of the loan. These loans can be repaid within 5 years, 7 years and up to 10 years time. The longer the loan repayment program, the higher overall interest that you will have to pay but the payments will remain lower because the loan principal will be divided into more installments.
The Bankruptcy Issue
The bad credit problem aggravates when the borrower has gone through a bankruptcy process within the near past. Most lenders require for two years to pass before any kind of loan can be approved. Moreover, there are lenders that will require 5 years or up to 7 years since the bankruptcy's discharge for approving any kind of loan regardless of its type or terms with the sole exemption of payday loans or cash advances.
However, there are sub prime lenders willing to approve bad credit unsecured loans even with past bankruptcies. Again, you should expect to pay higher interest rates from these non traditional lenders because they are taking a greater risk by lending to someone with a past bankruptcy. Yet, if you are in need of funding, it is probably the best solution available for someone that has experienced financial failure.
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