Are cheap unsecured loans possible? It really depends on your credit score. Obviously by offering no collateral, the interest rate will be higher because you pose more risk. Also, the amount you get will be less and the repayment period will be shorter.
But having said that, there are advantages to unsecured loans as well. Here are two of them:
1. No liens
Obviously by using you vehicle as collateral, you must have a lien on it until the debt is all paid off. Selling a car with a lien on it is very difficult.
2. Faster application
In general, you have to fill out less paperwork for unsecured loans, and they are generally easier to get with a poor credit rating.
So what affects your interest rate?
The main factor is your credit score. If it is bad, it will be difficult to find really cheap rates no matter how hard you look. However, there are three things you can do to improve your score.
1. Check your credit report
This is probably the quickest and most effective strategy. All you do is quickly scan your report for errors.
If any are found, then you must call up the credit bureau, and file a dispute with them. By law, they have to look into it and get back to you within thirty days. Just make sure you call up the company that reported the late payment first. Confirm with them you did indeed make your payment on time. Assuming you did, then it is definitely the credit bureau’s mistake.
2. Get a cosigner
This could help you get a better rate. It might even be the difference between getting approved or not. Try to find someone with good credit to cosign for you.
3. Make your payments on time
Obviously this is the long and hard option. But it is really your only other choice if you have tried the above two methods.
Your credit score is by far the most important factor that will impact your loan terms in the future. It obviously will not help you if you need money instantly. However you can still find reasonable rates for bad credit unsecured loans.
How much money can you get for an unsecured loan?
It really depends on what kind of loan you are getting. If you are just looking for a personal loan, you will not be able to get as much as if you were to obtain a business loan. You would be surprised how much of a difference this makes.
Where should you apply?
Your best bet is probably your local bank. They will usually give you the top rate. If that does not work, then try going online. In many instances filling out one loan application will give you a list of vendors who may be willing to work with you. There are plenty of third party sites that will connect you with other loan companies. Just be careful not to fill out too many applications. This will negatively impact your score.
Always read the small print.
Do not ever sign anything without thoroughly doing this. Also, do not forget to be on the lookout for loan sharks.
What are loan sharks?
Loan sharks are companies that provide loans at extremely high interest rates. Be sure to read reviews of any company before going with them. If you do not, you might end up with a dishonest firm that takes you for all you are worth. Just make sure to be careful, and never go with a company you have not heard of until you’ve found out more info about them from past customers.
The bottom line is, there are advantages and disadvantages to getting cheap unsecured loans. Hopefully this information will help you get the best rate possible.