You Need To Know This! Unsecured Bad Credit Loans: Explained
OK, let’s talk about unsecured bad credit loans!
If you have had problems with borrowing money due to a bad credit score you might be thinking about getting an unsecured bad credit loan. Having a proper understanding of what an unsecured bad credit loan is will help you to compare different loan options. It will also help you make an informed choice about which loan is best for you.
Consumers must be aware of what they are agreeing to when they get any kind of finance. Not all loans for people with bad credit history come with high interest rates. Though they are usually higher than normal ‘good credit’ loans.
Whether it is a unsecured personal loan, business loan, car loan, payday cash loan or otherwise. In the worst case you may end up having difficulty making your repayments and defaulting on the loan. This can end up being worse for your credit score in the long run.
Thankfully there are honest lenders and finance brokers out there. Hoolu is one of them (we speialise in bad credit car loans). So choose wisely and let us walk you through the process to match you with a better bad credit car loan.
What is an unsecured bad credit loan?
Unsecured loans are simply a loan that is not secured by equity. Equity is an asset that acts as security against a loan which is forfeited when a repayments aren’t made. They are approved when the borrower can make the repayments. This is determined by their current financial situation together with evaluation of financial history.
As with all loans an unsecured loan requires repayments to be made in future. This includes any agreed charges such as interest or fees and usually have a fixed interest rate. Unsecured loans are also usually short-term and for a smaller amount.
Is an unsecured bad credit loan a good idea for something like buying a car?
The short answer is no, not really. At Hoolu we don’t recommend using unsecured loans, such as payday loans or fast cash loans, for anything but absolute emergency situations. We actually only work with secured car loans as we believe that they’re the best option by far!
The reasoning for this is that these types of loans have more downsides than upsides. Firstly, the high interest rates these loans come with cater to their short time frame, which can mean they become expensive when not paid off quickly. They often come with extra fees and charges too. Lastly, they can have negative effects on your credit score, usually because they are often improperly managed with late or unpaid payments.
But even if properly managed they still leave history on your credit file of having used them in the first place, which can be off-putting for lenders as they may take your use of an unsecured personal loans as a sign that you aren’t able to properly manage your finances. This then makes getting approved for an important loan
If you want to talk more about getting a secured car loan that please get in touch – click here to say hello!
What are lenders looking for in a bad credit loan application?
Lenders generally look at unsecured bad credit loans as being higher risk because of this lack of security. This is the reason why unsecured loans often attract higher interest rates and fees. There may also be an establishment fee. But this is not the case for the borrower.
As always, it is important to think about your reasons for borrowing and whether you can comfortably make the repayments. You also need to fully understand the terms of your loan agreement to know your obligations.
Consumers must be sure to shop around by evaluating different options. Alternatively, choose a bad credit loan broker that works with a variety of different lenders to (Just like Hoolu!)
How does having bad credit impact my loan?
Whenever you make an application for a loan a credit check will be made on your credit file or credit report. This is the lender’s opportunity to assess the risk in granting you a loan. They are looking for default on repayments, unpaid debts, regular income, credit cards debts, and anything else noteworthy in your financial history.
The level of risk involved in lending to a person with a history of financial difficulty is why many lenders, including big banks, have strict policies on who they will lend to. They generally choose not to lend to applicants who are seen as being too risky. They are mainly concerned with the applicants ability to make repayments.
But, this doesn’t mean you shouldn’t apply for a bad credit loan. It simply means that you need to be selective with where you apply to.
Choosing a finance broker like Hoolu means you gain knowledge of the available options (We specialise in Secured 24 Hour Bad Credit Car Loans). This is because we work closely with a large number of lenders. It allows us to build a case for your loan to show the lender that they should grant you approval. It also comes with a degree of understanding – we know that life has it’s financial ups and downs and that’s perfectly OK!
How To Get A Better Deal On An Unsecured Bad Credit Loan
You must be selective with your application and who you choose to apply to. At Hoolu we have a long history of working with over 35 different lenders and have great relationships with all. We take into account your immediate financial situation to place less emphasis on the past.
This doesn’t guarantee you’ll get approved, but it does mean we can build a strong case for your loan application. We always do our best to match you with a loan that you are best suited to.
One important thing to consider when making an application for any loan is timing and how that relates to your finances. Life events such as career change, moving house, not having a fixed address, travelling, not working regularly or even studying, can all limit your access to the lowest interest rates. Aim to have a steady address and constant income. This helps to make your application look less risky and can help you get a better deal.
If you are receiving Centrelink benefits, are a pensioner, collect parenting payments, are self-employed, are a discharged bankrupt, or have no savings, you are still able to apply for a short term loan at Hoolu. Please note that while receiving Centrelink payments can be accepted, only certain kinds of Centrelink benefits are accepted. But this often changes so please contact us to make sure.
Always collect the relative documentation you need before making your application. This helps to speed the process and shows you are organised. You will be asked for anything specific you are missing. The basics are: identification, payslips, bank statements, details of credit cards, loans, mortgage, and references. These are all usually needed for applying for an unsecured bad credit score loan but every lender varies.
Applying For An Unsecured Bad Credit Loan
An application for a loan generally includes an authorisation for a finance broker or lender to access your credit history file. This means that they can see your full credit history. They can also see how many applications you have made for loans over time. When a lender accesses your credit file they can often leave record of their access. If you have made too many loan for bad credit applications they can give a negative impression of your credit history.
Think carefully about applying for a quick bad credit personal loan advertised as fast cash or a payday loan. It can negatively affect your credit score. Instant gratification shouldn’t be at the expense of negative marks on your credit history. It can make it more difficult to get a loan in future such as a secured car loan, business loan, or home loan through others lenders such as a bank.
If you’re not sure about the best way to get an unsecured bad credit loan for a large purchase then please contact us. We’re all about saving you time, money and difficulty. Ultimately we aim to help you put your best application forward for approval!
How can Hoolu help?!
We are your answer to getting a better loan. As a financial broker who works with all kinds of credit history we understand that everyone is different. It is this concept that allows us to cater to the needs of all our customers and work with them to find a loan that suits them.
We specialise in loans for all kinds of things, including both new and used items. Our main specialty is 24 Hour Car Loans with same day approval. But we also do business finance and all types of other vehicle finance.
Our goal is to make sure you are completely happy with your borrowing experience. We aim to make it fast, enjoyable and stress-free!
Things we can help you with –
Loans For Bankrupts
Unsecured Bad Credit Loans
Loans For Pensioners
Car Loans For Pensioners
Bad Credit Loans
Bad Credit Finance
Used Car Finance In Australia
Check Out Our Last Article!
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