Is it possible to resolve monetary issues through a loan? How can you spend the borrowed funds for the better outcome? Prioritizing the needs that are irrelevant can really make it hard for you to promote your habit of saving funds. In a financial drench, living a stress free life can be a real struggle if you do utilize the availed funds for the irrelevant expenses.
If budgeting is difficult and managing the sudden expenses seems to get tough, then it may be the right time to think about availing the loans. Small financial goals with no security to pledge make the circumstance perfect to opt for the unsecured loan. Competitive rates of interest and availability for the personal use increase the popularity of such loan alternatives. Since the loan is unsecured in nature, eligibility for this loan is not based upon the valuable asset.
Understanding the Unsecured Loan
Before you start, it seems necessary to understand exactly what the loan is and how it works for your financial well-being. Here are some details that might help you understand the nature of the loan:
- While shopping for this loan, the lender does not require you to put down anything as the collateral. In fact, most of the times you do not need to have a proof of home ownership under your name and a guarantor’s signature.
- With no compulsion of using the collateral, the loans are considered as a higher risk for the lender and the amount will be given to you is small. This is also why such loans do come with a bit high rate of interest.
Eligible Candidates for the Loan
Sometimes, getting approved for a loan seems to be difficult especially when you are not completely eligible for the loan. Before you shop for the loan, it always makes a sense to know about the eligibility criteria. If you meet the below conditions, then the approval is likely to land in your way.
- Candidates with poor credit score can also apply. Because the loan is not secured, the lender is always interested to lend the money for short span of time and that is why having a good credit score is not obligatory.
- Candidates above 18 years of age are eligible for availing the benefits of this loan product. The young applicants, who are residing in the UK, are qualified to avail the loans.
- A steady job of the borrowers is a reliable factor for the lenders on which they feel happy to lend money. Candidates with a secure job have more chances of getting loan approval because a job can only make it easy for you to repay the borrowed amount in time.
- Candidates should have a valid account in an authorized bank.
Can Poor Credit Score Affect You?
Nowadays, if you want to qualify for the unsecured loan, then there is no compulsion of having a good credit score. However, there is no doubt that your adverse credit profile can affect you. Let’s take a look at how poor credit score can affect you:
- The interest rates payable on this loan is a bit higher.
- You can’t avail large amount of cash. You can only apply for a limited amount and this is all because you have a poor credit record.
- Despite having unsatisfactory credit record, you may sometimes face loan rejection.
Tips To Get Affordable Rates
Finding the best rates of interest that you can actually afford may be a difficult process especially when you do not know how to approach it. Here are few tips that like to help you get the affordable rates:
- Apply for the short term loans- It can be upsetting if a lender charges higher interest rates. The first step that you can take forward is to apply for the small amount of money and this way, you can afford the repayments easily.
- Evaluating the deals carefully- Once you decided to apply for the small amount, the next step would be to evaluate the loan products carefully and select the one that you can afford.
- Boost your credit score- After finding the most suitable loan for your profile; you should prepare yourself for making payments in a punctual manner. If you stick to your repayment schedule, your credit score will be improved.
Traditional Lenders vs. Private Lenders
Availability of a wide range of loan products, interest rates and terms can make the task of finding the right loan easy especially when the traditional lenders and private lenders are completing each other in the market. Before applying for the loan, it seems good to know whom to approach for availing the loans. Traditional lenders provide secured and unsecured loans but they usually want the applicant to have a pleasant credit score whereas online lenders provide their services for those also, who do not have a clean credit score.
Traditional lenders charge high interest rates and may ask you to provide documents. On the other hand, private lending companies charge competitive interest rates and provide online lending services where no document hassle is involved. Therefore, in today’s time of increasing technology, it will be good for you to shop online for the right loan offers.