Saturday, June 21, 2014

Guaranteed Unsecured Personal Loans With Bad Credit: Avoiding the Trap

For bad credit borrowers, it can be something of a challenge to find a lender open to approving loan applications from them. Most lenders are hesitant because of the perceived risk, but this creates a marketing opportunity for online lenders. Offering a guarantee of approval draws interest, especially from those who are applying for unsecured personal loans with bad credit.

But can a loan application ever be guaranteed to get the green light? There are, after all, criteria to meet and affordability has to be proven, so surely a guaranteed loan approval cannot be a realistic offer. Nevertheless, the offer is commonly advertised.

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Of course, for those in difficult financial positions, and in need of cash to deal with growing debts, the deal can be too good to pass up on. This is the trap that those seeking unsecured personal loans often fall into.

Why a Guarantee is Impossible

It is true that lenders have the right to offer loan guarantees, but the problem is when that promise is not delivered. For individuals applying for unsecured personal loans with bad credit, the chief benefit is the certainty of getting the funds they need. Failing to get it, can leave them feeling cheated.

If the issue of a guaranteed loan approval is carefully considered, however, it can never be seen as a realistic promise. No lender is willing to grant loans to applicants who have no ability to repay, or to individuals with a record for defaulting on their debts. If they did, they could not make a profit.

It is a different matter when it comes to secured loans, because the lender has access to collateral as compensation should the borrower default. But in the absence of any form of security, the risk in lending unsecured personal loans dictates that lenders be careful who they lend to.

What About No Credit Checks?

Some lenders advertise no credit checks in an effort to attract more applicants. This is not the same as a guarantee, but does offer greater approval opportunities to those seeking unsecured personal loans with bad credit. With their poor credit histories ignored, they have as a much a chance as an applicant with an excellent credit history.

But there is a problem with this offer too, though not one in the same vein as with that of guaranteed loan approvals. Basically, there are certain conditions that applicants must meet, and the offer is typically available with limited loans. For example, most loans granted with no credit checks range between $100 (payday loan) and $5,000. Anything larger requires collateral as security.

Also, applicants must show they have sufficient income. So, while there is no interest shown in credit scores and past financial problems, details like employment status, income level and the debt-to-income ratio are important to get the unsecured personal loan.

Check Your Lender

While guaranteed loan approvals are something to steer clear of, there is also every reason to check out the reputation of all online lenders. It is a key method for those seeking unsecured personal loans with bad credit to protect themselves against dubious loan offers and unscrupulous lenders.

The best way to find out if a lender can the trusted is to visit either the Better Business Bureau or the Verify1st websites, both of which are designed to reveal the reputations of sites and businesses. The BBB grades businesses from A to F, so obviously only choose a Grade A lender.

However, even when a lender is given the all clear, check out the details in the small print of any loan agreement. This is where hidden charges on an unsecured personal loan can be found.

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