A personal loan is usually unsecured, that is, you do not need to pledge collateral as guaranteed repayment of the debt. This characteristic allows even a person who does not possess anything of value to apply for the loan. On the other hand, the interest rates are much higher than what you would pay on a loan secured by your home, car, or any other valuable thing. Another disadvantage of unsecured personal loans is the fact that you will not be considered eligible for a tax deduction on the interest payments.
At times, you are left with no other option than to go for an unsecured personal loan. For example, you do not have enough equity in your home to qualify for a home equity or any other kind of secured loan option. As there is no requirement of collateral, lenders keep the rates significantly higher than other lending options. Moreover, they also require you to possess a good credit report with a clean repayment history. People with bad credit or a history of bankruptcy are generally not found eligible for unsecured loans at most lenders.
It is not that you won’t find a lender who can offer an unsecured loan to a person with bad credit or to that with a history of bankruptcy. In fact, there are many, but the options they have are limited. This means you often find a situation where you have to choose the one that you dislike the least. Some loan options, such as payday loan, cash advance loan, car title loan, or tax return refund advance are available all the time, but you must make a choice after reading the contract documents carefully.
You can find it useful to use the Internet to search and shop for the best loan option. This platform allows you to get details of products from various lenders and compare their rates online. While searching for unsecured personal loans online beware of lenders who demand an upfront fee or down payment to grant a loan. It is prudent to read thoroughly the loan documents and understand their subtle points completely before putting your signature on the promissory note.
A person with bad credit or the one who has experienced bankruptcy in recent years can find it convenient to apply for unsecured loans with cosigner. Having a co-signer who has an excellent credit record helps you increase the chances of getting a better loan terms and interest rates. A personal loan can also help consolidate debts. If the purpose is debt consolidation, you must try to get a deal that can help you pay off the debt conveniently.