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Bad Credit Unsecured Loans-Good or Bad?
Do you have a bad credit? Are banks not accepting your loan application due to your bad credit history? Do you need a loan at any cost right now? If you have said yes to at least two of the three questions then bad credit unsecured loans are made just for you.
Bad credit unsecured loans are simply a kind of unsecured loans. In the financial world, loans come in two flavors to be exact i.e. secured loans and unsecured loans. Secured loans are granted by the tradition lenders while unsecured loans are provided by private lenders.
Secured loans are long-term loans provided at a low interest rate. The only problem with these loans is that banks won’t allow you to get access to these loans if you have a bad credit history. Only people who have a good credit history can secure these secured loans.
So, what do people who have a bad credit do? They simply are left with the option of applying for bad credit unsecured loans. These loans are called ‘unsecured’ as private lenders don’t ask for any guarantees from the borrower while lending the loan amount.
The best thing about these bad credit unsecured loans is that even if you have a bad credit history, it would have no impact on your loan deal. You stand as much a chance of securing this loan as a person with a good credit history.
However, there is one down side to this deal. You will have to repay the loan amount at a higher interest rate than at normal loans. For instance, if you pay normal loans at an interest rate of 5% then you will pay bad credit unsecured loans at a higher interest rate of around 8-10%.
However, there are many benefits of this kind of loan. You can actually secure these loans and get cash to solve your financial problems. These problems may vary from renovating your home, building a new kitchen, mending your house roof, managing credit card bills, buying furniture, throwing a party, paying your tuition fees or arranging your son’s marriage function.
You can solve all these problems and more with bad credit unsecured loans. However, there are other benefits as well. You can enhance and better your credit rating too with on schedule payment of these loans. The day your credit rating returns to normal, you can become eligible for traditional loans and can start securing larger amounts to tackle your bigger needs.
So, are these bad credit unsecured loans good or bad? To be honest, they are a good solution to your immediate financial needs. You must understand that you should not borrow the loan just to better your credit score as if you fail even once in repaying the loan amount on time; your credit history is going to be further dented.
Thus, all in all, bad credit unsecured loans are the best for people who are in need of cash but cant procure secured loans due to their bad credit history.