Showing posts with label unsecured loan. Show all posts
Showing posts with label unsecured loan. Show all posts

Monday, December 14, 2015

The Truth About Bad Credit Debt Consolidation!

Bad credit restricts approval for most kind of loans and even if approval is possible, the loan terms are altered to match the risk implied in the financial transaction for the lender. In order for a loan to be suitable for debt consolidation, there are however, certain terms that need to meet some requirements and bad credit may impede this.

Secured And Unsecured Consolidation Loans

Secured consolidation loans are home equity loans or second mortgages that use your home equity to guarantee the loan amount. The interest rate charged for this kind of loans is low and thus, they are perfect for consolidating debt. Since the loan is guaranteed, there are not harsh credit requirements and someone with bad credit can easily get approved.

Unsecured consolidation loans have no collateral at all and thus, the risk involved in the financial transaction is higher and so is the interest rate charged for them. The lack of collateral also implies that the lender will have more strict requirements for approval and though someone with bad credit may get approved, he will be required to pay higher interest rates.

Thus, bad credit applicants should be divided in two: those who are homeowners and thus, despite their bad credit can obtain a reasonable interest rate and those who are non-homeowners and need to resort to unsecured consolidation loans. The latter, even if they qualify and get approved for an unsecured consolidation loan, chances are that they'll have to face higher interest rates and thus, consolidating with a higher rate makes the transaction too onerous to be useful.

Consolidation Loan Amount

The loan amount is also an important issue, depending on the amount of outstanding debt you have, you'll need to apply for a high amount consolidation loan or a small or medium amount consolidation loan. High loan amounts can only be obtained through secured consolidation loans and thus, only those with bad credit who are homeowners can consolidate high amounts of debt.

Those who are non-homeowners can only obtain small to medium loan amounts by requesting an unsecured consolidation loan. Else, non-homeowners should hire the services of a debt consolidation agency that can negotiate with creditors new loan terms since qualifying for an unsecured consolidation loan with bad credit is difficult and you can't obtain high loan amounts.

As you can see, obtaining a bad credit consolidation loan is almost impossible for tenants and non-homeowners. It is better for them to hire a debt consolidation agency and have their debts re-negotiated. However, those bad credit applicants who can offer an asset as collateral can get secured consolidation loans for fair amounts in order to exchange their expensive debt for a single and cheaper loan.

Tuesday, July 7, 2015

Shed Debt Burden through Bad Credit Debt Consolidation Loan

You have a pile-up of debts and a financial disaster is waiting if you do not pay off debts at the earliest. The best way of clearing debts is to take a debt consolidation loan. Your problem in taking the loan is that you are labeled as bad credit which makes lenders apprehensive. The solution lies in applying to the lenders who specialize in offering bad credit debt consolidation loan. You can pay off all your previous debts immediately through the loan despite bad credit.

Bad credit debt consolidation loan is opted for by the people who are having a bad credit. On taking the loan, bad credit people can pay off all previous debts immediately. But the debts remain the same. The difference is that the debts are consolidated under one new lender. You therefore no longer pay installments to different lenders but instead pay monthly installments to one lender only. Like any other debt consolidation loan, bad credit debt consolidation loan is useful only when it is taken at lower interest rate as compared to the higher interest rate you have been paying on previous loans.

Your bad credit is of no major concern to the lenders if you opt for secured bad credit debt consolidation loan. Because to take the loan you have offered any of your property like home that has equity, lenders have no risk as in case of payment default the lender can recover the loan by selling the property. Secured bad credit debt consolidation loan therefore comes at lower interest rate despite bad credit. Lower interest rate is crucial in taking a debt consolidation loan.

If you are a tenant or student, you can opt for unsecured bad credit debt consolidation loan as you may not have property for securing the loan for the lender. In the absence of collateral though bad credit debt consolidation loan is offered at slightly higher interest rate, still after calculating previous interest, lenders will surely offer a comparatively lower interest rate. On comparing different loan offers you can settle for a better interest rate. Take a repayment plan to the lender for convincing him about safe and timely return of the loan.

Bad credit means you repeatedly defaulted on loan payments and therefore faced CCJs and may have filed for bankruptcy. On FICO credit score range of 300 to 850 you as bad credit are having a credit score of below 600. You should pay off some easy debts before approaching for bad credit debt consolidation loan as this will convince your seriousness towards paying off the loan.

Prefer applying online for bad credit debt consolidation loan for fast processing and approval. Online lenders take no fee on loan processing and on giving vital details of the loan.

Bad credit debt consolidation loan enables you in improving your credit score as you pay off each installment of the loan in timely manner. Make sure that you take the loan at lower interest rate as compared to previous loans.

Friday, April 4, 2014

Bank Credit

When dealing with a bank, credit can be a difficult issue to deal with. Although banks are often the first lending source that comes to mind when a prospective customer needs extra money, banks also have the most stringent loan procedures, credit requirements, and also the most extensive documentation and paperwork. When applying for a bank credit card, one thing you must remember is that a credit card does not offer the same benefits as a personal loan.

To obtain bank credit the bank will check only the applicant’s credit, payment history, and other stability factors, but also make their loan approval decisions based on the amount of risk posed to them. That’s why, in most cases, they require collateral in order to obtain a larger loan. This is also the case for many bank credit cards, whether one realizes it or not. This means that they secure the loan on valuable assets the borrower has. Traditionally, this is a home or car. A lien is placed on the asset until the loan is paid off. In the event that the loan defaults, the bank can foreclose or sell the home or asset in order to repay themselves the money that is owed.

Naturally, while this removes much of the risk for the bank, it poses a lot more risk to the borrower. This is even more strongly the case for business loans. A new business owner may be hesitant about risking his hard earned assets that took him years to earn in exchange for a business venture that has potential but not certainty.

The alternative to this situation are lenders that offer unsecured loan options. Although these companies are not as prevalent as traditional banks, they offer many more advantages and innovate programs to customers. It is important to assess personal risk when considering financing.

Tuesday, February 5, 2013

Understanding Secured And Unsecured Personal Loans

When comparing secured and unsecured loans, it is to be noted that lenders tend to be more flexible when granting secured loans. Usually the borrower is given a lower interest rate and longer terms to repay the loan compared to an unsecured loan.

Secured personal loans are provided to borrowers who are able to provide some kind of collateral as security. The most common forms of collateral used to secure loans are personal property such as your home, land or automobile. When your home is used as collateral, you will often hear the loan referred to as a home equity loan or a second mortgage loan. Personal loans can also be secured with stocks, bonds, certificates of deposit, a savings account, and so on.

This property is kept as collateral with the lender. He may repossess it legally, if you are unable to repay his money. In return you enjoy low interest rate and long repayment duration. You are also free to fix monthly installments according to your capacity and wish. Besides this you are also free to borrow a good amount due to the presence of collateral. Under secured personal loans, a borrower can access an amount which ranges from 5,000 to 100,000 pounds. This amount is quite satisfactory to meet any of your personal needs.

It must be mentioned that secured personal loans are not free of faults. If you fail to repay the loaned amount within proper time frame, the lender can repossess your property. But if you are totally determined about you and your repayment ability, you can easily enjoy all its benefits without any kind of inconveniences.

For those who do not have any collateral to put up for security, they can apply for an unsecured loan because it does not require any collateral. That is why unsecured loans are a great option for non-homeowners. Unsecured personal loans can be obtained without pledging your valuable asset. You can easily borrow anything within a range of GBP1000 to GBP25000. The repayment term varies from one to 10 years. You can borrow an amount that can be easily repaid on time.

You can access non secured personal loans easily as they dont involve collateral evaluation formality. There is less of paperwork involved and this makes the process fast and convenient. Where as with a secured loan, it takes more time for the loan process because the lenders need to evaluate your collateral and there are more paper works.

The loan amount offered depends on your annual income, financial standing and repaying ability. After analyzing these factors an amount is decided and sanctioned. You can choose a repayment plan depending on your repaying ability and the one that is feasible. However, a minus point is these loans are offered at slightly higher rate of interest as they are free from collateral clause. But it is beneficial in another way in that you are not putting your home or valuable under risk to the lender. If you have higher a credit score it can guarantee a higher loan amount and a lower interest rate.

These loans can be applied from various banks and online as well. Online is the most convenient way of applying as you just have to fill up a simple application form. You can search for competitive rate deal with flexible conditions by doing a bit of market research. Author: ksanjitha