Category Archives: Loan Tips

Guaranteed Unsecured Loans, A Good Idea?

Guaranteed unsecured loans are meant to speed up the process of finding approval for people with a bad credit history, but are they a good idea?

The first thing you need to understand is that lenders offer you interest rates based on the level of risk the lender feels they are taking.

The conditions of these offers are already a higher risk, without the added promise of approval for all. See, a secured deal gives the lender some form of collateral in the case that you fail to make your payments, and because the lender has this assurance they offer you, the customer, a lower interest rate. But, because we don’t have any kind of collateral, your interest rate goes up.

Then you add into the equation your bad credit history, which means the lender is taking a much greater risk that they will not be repaid. This will raise your rates a great deal more.

And then on top of all that when you add in the promise of approval for everyone for guaranteed unsecured loans. This means that people with worse financial histories than what you have are approved, and the interest rates offered typically reflect that risk the lender is taking.

Of course, if you have terrible credit and no time to try and seek out approval and receive multiple rejections, then this price may still be worth it for you. If you do manage the payments well and make them on time each month this will even help you build up your credit history for the future.

However, if you have the time, you can still try and apply at more traditional lenders. If you have a job that you’ve had for a while and have lived in the same area for a good period of time these things will help establish you as a stable customer. It will also help if you can explain why you’ve had financial problems in the past, such as medical bills, divorce, or other experiences, and some things you’ve done to help rebuild your credit since then.

If you can find a more traditional offer you will still have high interest rates, but lower than what you’ll find with guaranteed unsecured loans.