When applying for loans, one should consider getting a non collateral loan. A non collateral loan is an unsecured loan that does not require collateral to be approved. As someone with bad credit, this type of loan is useful for getting money upfront. However, banks consider non collateral loans riskier. Due to your credit score, you may have difficulty securing this type of loan. Read on to learn how to qualify for non collateral loans.
Check Your Credit Score
The first step you need to complete to get a non collateral loan is checking your credit score. This is a necessary step for understanding what options you have available. You may be surprised to learn you can finance auto loans with bad credit. See if your credit card company will give you your FICO score for free. Most banks look for a minimum credit score of 500 and over. If your score is sub 500, you most likely will not qualify for a loan. You may have to settle for loans with high interest rates. Expect interest rates of 10% APR or higher. If your score is bad, don’t panic. You can take steps to get approved for a loan. You need to check your credit score before applying for a non collateral loan.
Prepare The Necessary Information
To improve your chances of qualifying for a non collateral loan with bad credit, you should prepare your necessary information. Banks look for planning skills in loan applicants. Not having your necessary documentation ready will disqualify you for a loan. You will need a valid ID, your credit history, and loan purpose statement. These are the essentials for every loan application. Other institutions may have age requirements and require a payslip. Set aside half an hour to an hour to assemble all your documents. Double check that you have everything before going to apply for a loan. Preparing your necessary information will help you get an unsecured loan even if you have bad credit.
Consider Online Options
If your credit is so bad that banks refuse to grant you a non collateral loan, you should consider online options. From social media customer service to loan options, the internet provides so many advantages. Online lenders usually operate as networks or peer to peer. Almost everyone will qualify for an online loan. Some factors to consider for online options are high interest rates, and slow loan acceptance time. Depending on how bad your credit is, your APR will be anywhere from 5-35%. It may also take weeks or months for a lender to take on your loan request. Despite these drawbacks, online non collateral loans are favorable if you can pay back the money on time. Keep online networks as a secondary option for bad credit non collateral loans.
Payday loans are a risky non collateral loan option for bad credit borrowers. You should always ensure that you have payment protection. Payday loans may seem attractive at first. They are usually accepted quickly and offer same day payouts. However, you may get trapped in a vicious cycle. If you fail to pay back the loan on time, your terms will be extended with increased interest or fees. The amount you owe can grow and grow. Payday loans are good as a short term option. If you need emergency money right away, you should consider a payday loan. Use this as a last resort, other non collateral loan options are much safer.
Co-Signing For A Loan
If your credit is bad but not terrible, having a co-signer can improve your chances of getting a loan. If you just barely fail to qualify for a loan, you should ask the lending institute if you can have someone co-sign for lending. This will can help you get the loan approved. For this option, you should find someone willing to lend you a helping hand. You have to convince someone to be a co-signer as well as convincing the bank. Keep in mind that co-signing will affect your co-signer’s credit if you renege on the loan. This can potentially ruin relationships if you’re not careful. Find a co-signer for non collateral loans if you can repay your loan.
Non-collateral loans can really help give borrowers a second chance. Scope out your options by checking your score and preparing your information. Afterwards, consider co-signing, payday loans, and online options. Pick the right non-collateral loan option to turn your life around.