Life is always unpredictable, and many uncertainties can get anyone at any time.
Primarily, anyone can face a financial crisis, where they may have to seek external help.
And that’s why anyone can need unsecured loans for bad credit.
But what can happen if you have bad credit? Can you get a loan without providing the lender with collateral?
That’s why we’re here, and you’re going to learn how to get a loan without collateral. Read on.
What is an Unsecured Loan For Bad Credit?
How many times have you heard about unsecured loans?
Maybe, it’s not once or twice, but do you know its meaning? Don’t worry; you are here to learn.
So, an unsecured loan is a loan in which a borrower doesn’t need to provide their property details or a guarantor to get it.
Instead, the lenders depend on the borrower’s creditworthiness to approve the loans.
As much as these loans are a good fit for the borrowers, they pose a greater risk to the lenders if they default on the loans.
However, lenders can get collection agencies to get the payment balance from the borrowers.
But there is no guarantee that the borrower will pay.
Furthermore, as a borrower, you need to be careful with payments of unsecured loans.
Remember that you will jeopardise your credit score if you skip multiple payments.
Therefore, you may not get help the next time you need it.
Examples of Unsecured Loans
Of course, not all loans are unsecured. So, you need to know the type of loan you are applying for before you sign the contract.
As the name suggests, personal loans are individual loans that you take against your name and signature. In most cases, the lenders approve your loan depending on your creditworthiness and income level. Personal loans can also be secured, so be keen when signing the loan agreement.
Mostly, payday loans pose as unsecured loans for bad credit since you get them without credit checks. The lenders will only need to see proof of stable income, and there you have your cash.
However, some lenders may require you to give them a postdated check that they will deposit once you get your next paycheck.
Credit card loans
A credit card loan is usually not secured. You can spend more than your credit card balance and then spend it again. There is no security involved in the credit card overdraft.
What is Bad Credit?
You have bad credit when your credit score is less than 580 on the FICO score.
Most times, it’s very tough to get unsecured loans for bad credit. And that doesn’t stand well if you need emergency funding.
However, bad credit is not a limitation to getting unsecured personal loans. Some brokers like Loan Princess can help you get the loan you need.
How to Qualify for an Unsecured Loan for Bad Credit
If you apply for an unsecured loan, the lenders and brokers will perform a credit check.
That allows them to determine the loan amount to give you, reducing the risk’s more significant part.
Apart from doing a soft credit check, there are other requirements you need to get loans with bad credit. Let’s see them:
- You should have a stable income source. It’s a fact that you cannot get a loan without income. Otherwise, how will you manage to repay the loan? Furthermore, no lender can take that risk.
- You must be an adult. In the UK, you become an adult when you hit 18 years. That means you will be responsible for the loans you take.
- You must also possess an original national identity document before getting a loan.
As you can see, the requirements are essential for getting any loan. Therefore, ensure you have them before you proceed.
Can You Get an Unsecured Loan for Bad Credit with Loan Princess
Yes. Loan princes is a broker who will help you get unsecured loans for bad credit in a short while.
You don’t have to search for a suitable lender.
Instead, you have to fill in your details on the loan application form on their site.
Afterwards, the broker will link you to a suitable lender according to your affordability and creditworthiness.
In addition, if your credit score is terrible, you will still get a loan, but the loan amount will be low, and the interest rates will be a bit higher.
What To Do?
Since you know all about getting unsecured loans, you can get the loan you need with a trusted broker.
However, ensure you manage your loans wisely.
Remember, if you adhere to the repayment term, you will stand a chance to rectify your bad credit score.