Everything You Need to Know About Unsecured Bad Credit Loans
Unsecured bad credit loans
Do you have bad credit? If you’re looking for a loan with bad credit, you may consider an unsecured loan for a number of reasons. Understanding what unsecured bad credit loans are is a great point to start when deciding what loan is best for you.
Unfortunately, loans often come with high interest rates and fees if you have bad credit. This can lead to your bad credit getting worse as you struggle to make huge repayments each month. We want to help you to avoid these issues wherever possible and to lead you through the process of getting the right bad credit loan for you.
What is an unsecured loan?
Unsecured loans are loans that are not secured by equity. They are generally smaller loans and they are borrowed over a shorter period of time than other types of loans.
An unsecured loan relies on future repayment of the loan and any agreed fees and charges. No equity or assets are involved in an unsecured loan; they are simply approved based on your ability to repay the loan.
Generally, unsecured loans are seen as higher risk to the lenders (although they pose less risk to you as a borrower). This means that they can often have higher interest rates and fees than other types of loans, so it’s important to shop around and find a lender with experience working with people with bad credit.
How does having bad credit impact your loan?
When you apply for a loan, the lender will look at your credit history or financial record. They will be able to see if you have bad credit and for some lenders, this will raise alarm bells. Many lenders, mainly big banks, will simply refuse to lend money to people with bad credit.
For lenders who specialise in bad credit loans, they’ll be able to assess your credit history and they may look into the reasons for your poor financial history. This means they may understand your bad credit history and be prepared to consider it more in depth and evaluate your risk accordingly.
Generally, when you have bad credit, you pose a higher risk to the lender as they have less evidence that you’re able to pay back the loan in full over the agreed term. You are likely to be given slightly higher interest rates and fees due to your bad credit.
How to get a better deal on your unsecured bad credit loan
Finding the right lender is really important when you’re applying for bad credit loans. You’ll be able to work with them, explaining the reasons for your bad credit and the strengths of your current financial position.
It’s also important to consider the timing of your loan application when you apply for an unsecured bad credit loan. If you have recently moved jobs or are currently without a fixed address, you could lessen your chances of getting a good rate. Showing signs of stability such as regular income or a fixed address could really help you get a better deal.
Always make sure you have all the documentation you need. Any missing documents such as ID or references could slow down the process and affect your chances of getting a good deal on your unsecured bad credit loan.
Applying for an unsecured bad credit loan
It’s really important that you don’t make numerous applications for unsecured bad credit loans. It can be tempting, especially as online applications often only take a matter of minutes. Remember that lenders will be able to see the applications that you have made, and multiple attempts will raise red flags.
If you are unsure about how to apply for an unsecured bad credit loan, or what documents you’ll need to apply, speak to us for advice and we can guide you through the process. It’s worth getting your application right first time to avoid wasting unnecessary time, money, and stress.
Always make sure you’re in the best circumstances possible to apply for your unsecured bad credit loan. If you’ve just moved jobs or home or you currently don’t have the means to repay a loan, take the extra time and wait until you’re in a better situation – it’ll pay off long term.
Find out how we can help you get an unsecured bad credit loan that suits you.
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