Unsecured Loans Online

83Traditionally banks and building societies offered two types of loans; secured and unsecured.

Secured loans were designed for homeowners who had a property that could act as security for the loan; unsecured loans were designed for tenants and non-homeowners who are unable to pledge a property as collateral. Secured loans typically had lower rates of interest than unsecured due to the presence of security.

The general structure of the loan market has stayed the same; there are still secured and unsecured loans, and while the secured variety has stayed relatively similar throughout, the introduction of the internet has revolutionised the unsecured market.

Not only has there been an increase in the amount of lenders offering this type of loan but there has also been a vast increase in the types of unsecured loans available, each offering a different product at different rates in order to suit any financial requirements.

Here’s an overview of the types of unsecured loans available online:

  • Guarantor Loans- A specialist bad credit loan designed for those who have been declined by a mainstream lender due to their credit history. These require a homeowner guarantor to support the application and guarantee to pay the monthly repayments should the borrower fail to do so. Loan amount available typically ranges from £1000 to £5000 over a term of 1 to 5 years.
  • Tenant Guarantor Loans- Similar to the standard guarantor loans these require a guarantor to support the application, the difference being the guarantor can be a tenant or non- homeowner. Again, the guarantor must have good credit and must be receiving regular income. Currently lenders will only be able to offer a £1000 product which is repayable over 12, 18 or 24 months. The interest rates will be higher than that of the homeowner guarantor due to the risk involved to the lender.
  • Installment Loans- A new product offering between £100 and £1000 over a term of 1 to 12 months. The loan term is very flexible however it will be somewhat dependent on the amount borrowed, for instance: you are unable to borrow £100 over 12 months. Installment lenders will look to process each application the same day they receive it, meaning the loan can be paid out within 24 hours.
  • Payday Loans- A popular new type of unsecured product offering quick cash that is designed to be repaid in full at their next payday. The payday process is very much automated meaning they will carry out a quick credit and affordability check upon receiving authorisation from the applicant, this means the process is very quick. Most lenders will offer a decision within 10 minutes of applying meaning that if the loan is approved the cash can be with the applicant within the hour.

Having taken this brief overview into account you must then find a lender that is offering the most suitable unsecured loans online. Once again the internet has revolutionised the way in which people do this, the traditional way was to search the market manually trawling various search engines! Nowadays the most popular method of finding the most suitable loan is using a loan comparison website. These will have a panel comprising of over 100 lenders meaning there is always a product to suit you.

Unsecured Loans For Tenants

82While homeowners may find it hard to get the loans they want at the terms they prefer, those of us who do not own property face our own problems. A large number of people still rent their residences, and this has a definite effect on their loan applications. The good news is that there are unsecured loans for tenants available, ensuring financing options exist for that niche too.

The problem is that tenants are not property owners, so are perceived to have no collateral or security. But as with all loans, the key issue is affordability. Securing affordable tenant financing is not that difficult if the right lender is approached, and the application is strong and in proper order.

But there are conditions to getting an unsecured loan approved that all tenants should keep in mind.

What Are Tenant Loans?

The key problem for most tenants and non-homeowners is a lack of assets. It means that collateral is usually a difficult thing to find, thus making loan approval difficult to get. This is the vacuum that unsecured loans for tenants are designed to fill, providing those with no property access to much-needed funds.

The issue for lenders is that because people with no property, or no home of their own, have no equity and little likelihood of having meaningful collateral, they are high risk borrowers. As a result, unreasonably high interest rates are often charged, making a loan even less affordable for the applicant. But with so many people living in rented accommodation, demand for affordable tenant financing is high.

Loan limits can reach as high as $5,000, though another unsecured loan option is a guarantor loan which, with the benefit of a qualifying cosigner, can be as high as $15,000. The purpose, meanwhile, can be anything, including buying a car, financing a vacation or even consolidating existing debts.

Qualifying for Tenant Loan

The basic criteria required to qualify for an unsecured loan for tenants are the same as any other loans. Applicants must be over the age of 18, be a US citizen or legal long-term resident, and must have a source of income. The only other stipulation is that they be currently renting a property.

Other criteria needed to qualify is that there be no recent history of loan defaulting (over previous 24 months) or of bankruptcy, while it may be necessary to provide proof of income also. Getting affordable tenant financing will usually mean providing concrete proof of income too, showing there is enough excess to meet repayments.

For large sums, from $10,000 to $25,000, it is also possible to get a guarantor, but this depends on the flexibility of the lender. Some are strict and have a firm limit of around $10,000. However, others are willing to extend the unsecured loan limit if the guarantor has an excellent credit history.

Applying Online

Normally, the best loan options are to be found online, with a variety of online lenders offering loan packages with the lowest interest rates and most flexible repayment terms. It is no different when it comes to unsecured loans for tenants and other non-homeowners. The application process itself is simple, with basic information required on an online form, and it is normal to have an advisor answering queries while the form is being filled in.

There is, of course, a security issue when providing financial information online, so be sure to check any prospective lender out on either the Better Business Bureau or Verify1st sites. But even if the lender is safe, the issue of fees and charges must be considered. Affordable tenant financing is available, but online quotations should be free. So, read the fine details of the contract and invoice to make sure everything about the unsecured loan is above board.

Unsecured Loans With Bad Credit

81Today, getting approval for any size of unsecured loan with bad credit can be difficult. This is because traditional lenders, like banks, have adopted strict lending policies, applying something of a credit squeeze by making the requirements for qualifying more difficult to satisfy.

Of course, there is no great shock in this. Stricter requirements are designed to protect the lenders from the kind of losses they have suffered in the economic crises of the last few years. And of all the loans on offer, unsecured loans carry with them the greatest risks. So, higher interest rates are to be expected.

Fortunately, there are lenders who are willing to grant loan approval despite poor credit scores, and with terms that are affordable for bad credit borrowers. These lenders are commonly known as private lenders, and they offer some genuine advantages over the traditional lender options that exist.

Finding a Private lender

Admittedly, there are a multitude of private lenders in operation, and the best resource to use to find the most suitable for your loan application is the Internet. Of course, there are risks to approaching lenders online, with many unscrupulous operators found there. And when seeking an unsecured loan with bad credit, further complications are the last thing needed.

That is why it is a good idea to check the reputation of any lenders that seem to offer a good unsecured loan deal. The Better Business Bureau provides a grading system that is based on market performance, with any complaints against businesses noted and influencing their grade. Be sure to settle for no less than A+ grade private lenders.

And, as always when considering financial products, be sure to read the small print of any loan agreement to ensure there are no hidden fees lurking. Getting loan approval despite poor credit scores can be reason for celebration, but the celebrations will be cut shot when the unforeseen expense creates unwanted pressure.

Improving Your Approval Chances

If an applicant’s income is relatively low, proving that a loan is affordable can become a challenge. This can cause real problems when trying to get an unsecured loan with bad credit. But by enlisting the assistance of a cosigner, the chances of securing a large sum loan are greatly increased.

What must be remembered, however, is that a cosigner must have a large income and have an excellent credit rating to be considered acceptable by the lender. After all, the cosigner is a guarantor, so must be able to afford the repayments should the borrower fail to make them.

A lender that grants a $25,000 unsecured loan will expect the borrower to have a large income too (perhaps $75,000), and for smaller loans of $2,000 to $5,000, as much as $40,000. However, to get approval despite poor credit scores on a loan of more than $25,000, a cosigner is almost a must.

Qualifying For An Unsecured Loan

There is no great trick to qualifying for a loan, and when it comes to applying for unsecured loans with bad credit, none of the criteria can be considered a surprise. Applicants must be over 18, be citizens of the US (or legal long term residents), and have a reliable source of income.

However, the issue of bad credit can be a problem if it is very low. Bad credit scores range between 550 and 700, with anything lower considered very bad. But many lenders are reluctant to grant loans to applicants with less than 620. So, getting approval despite poor credit scores can be difficult.

It might, therefore, be worth taking out some smaller loans to clear some outstanding debts, and in that way improve your credit score before applying for any large unsecured loans.

Get a $20,000 Unsecured Loan Now, Even With Bad Credit

80Convincing lenders to grant loans to bad credit borrowers is very difficult. Caution should not be mistaken for unwillingness to lend. Every problem has a solution. It is possible that your bad credit will not stop you from getting a $20,000 unsecured loan.

Loan applications do not stop in their tracks simply because of a poor credit score. Believing this would be a major mistake. There is a golden secret to getting the loan approval you are seeking: convince the lender that the loan will be repaid in full. The best way to do this is to prove that you can comfortably meet the repayments.

A large unsecured loan is tough to get even with perfect credit scores. So you will have to follow a few steps to help your cause.

What Really Matters?

You have to carefully plan your application so that it is convincing. It has to convince the lender to loan you $20,000 unsecured. Your credit score will never be the reason for the application to fail. Other factors influence the decision much more than credit scores.

In the long run, employment and debt-to-income ratio are the key factors that will make or break your application. You should have a full-time job that you have held for at least six months. The income from that job needs to be high enough to cover the repayments. If you are self-employed, you will need to supply income tax statements showing that you generate enough income to cover the repayments on a monthly basis.

The debt-to-income ratio takes your monthly income and compares it to your monthly expenses. The strict limit applied by lenders is 40 percent. This means that any excess income has to be high enough to support a repayment of 40 percent. For example, for every $100 of excess income (income left after paying expenses, you can afford $40 of loan repayment.

Making Your Application More Secure

Even with a strong debt-to-income ratio, it may not be enough to secure the loan. If you can add security, you change the unsecured loan to a secured loan. Secured loans are easy to approve. If the repayment is not made, the security is taken to pay off the loan.

When you think about security, do not overlook that security is not just assets. Security can be a cosigner. Your cosigner guarantees repayment in the event that you fail to make monthly repayments. If a cosigner is accepted by the lender, the chances of default fall to almost zero. This improves chances of approval to almost 100 percent.

Seek Out the Best Lender

After doing all the preparation to submit the strongest application, it is foolish to apply to the wrong lender. It is very likely that the traditional lenders will certainly not grant an unsecured $20,000 loan to a person with bad credit.

There are plenty of online lenders who will not only take on the risk of granting you the unsecured loan but are actually in the business to specifically do this. They accept the risk because their business model allows them to.

There are also private lending firms that specialize in unsecured loans to people with bad credit. They also accept the risk of granting these loans.

Both the private lending firm and the online lender have structured their loan offerings to be affordable. This makes the loan packages worthwhile to both you and them. Since these packages were designed specifically toward people with bad credit, they are easier to get approved.

Make sure you check out the lender before signing. Not all lenders are legitimate and some are risky to do business with.

Answers to Questions About Unsecured Loans

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Many of us have too many expenses and too little income. We turn on the news and we hear the economy is recovering but when we check our bank balance we just do not see it. If only we had an extra $20,000 we could meet our most pressing obligations.

Once we could refinance our homes or take out home equity loans to help. But the housing bubble burst and we no longer have such options. The risk of not only missing the loan repayment but being homeless is just not appealing. Unsecured loans seem a better choice. But you have so many questions. The following may answer some of those questions.

Is it difficult to get an Unsecured Loan?

Many people believe that unsecured loans are hard to get. If you have good credit then there are many private lenders who will accept your loan application and give you up to $20,000 in an unsecured loan.

But if you do not have good credit and even have bad credit, it is much harder to qualify for this type of loan on your own. You can get around this with a cosigner. With a cosigner, both of your incomes are used in determining eligibility. Likewise, it is the credit rating of the cosigner that is used to determine interest rates and terms.

What Can I Do with an Unsecured Loan?

There are no limitations on what you can do with this type of loan. Unsecured personal loans are truly personal. You can use them to pay for a wedding, fix your car or consolidate debt.

Unsecured personal loans are also called signature loans. This because the only thing you are putting up against the loan is your signature. With that signature you can get approved for up to $20,000.

Is Repayment Difficult?

You should always consider repayment before you think about applying for any unsecured loan. There are several ways you can repay the loan. If you take out a loan with a longer term, up to six years, you will have lower monthly payments but you will pay more during the life of the loan due to the interest accumulation. Shorter term loans cost less overall but you will pay more each month. This is why you need to have a budget in place so that you know which option is best for your financial situation.

How Do I Find Such a Loan?

Now that you know you want an unsecured loan, you have to go out and find a lender to work with you. You have many options if you go onto the internet and search. You will find lenders who specialize in unsecured lending. Make sure you look at three to five lenders and compare rates, terms, fees and conditions. Do not keep looking for loans since the frequent checks on your credit will lower your FICO score.

Borrowing money is always a major decision. Taking out an unsecured loan is a really big move. You will be happy to know that many online lenders not only will work with you but they actually are in the business solely to assist people like you. You can get up to $20,000 with only your signature.