Unsecured Bad Credit Loans - A Beneficial Alternative to Payday Loans

Inability of bad credit borrowers to get unsecured personal loans is another myth busted. Many people are under strong impression that if they have damaged credit they may only be eligible for short-term payday loans or cash advances. Actually, receiving an unsecured loan with bad credit is very possible. One should not count on extensive loan amounts and modest interest rates that good credit borrowers may get though, but receiving up to $7,500 with a tolerable interest rate and duration of 3 years is very feasible. Such loan offers are very advantageous to bad credit borrowers when compared to payday loans that feature very limited amounts and extremely short terms and are a great long-term financing solution for many needs they may have.

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Unsecured Personal Loans Are Of Great Help to Bad Credit Borrowers

Should you seek advice with so popular credit counselors, they would always recommend long-lasting preparation for a loan application to include credit report overview, credit record correction, and revolving debt reduction. While this is true with mortgage applications, as they have extensive requirements to meet, unsecured personal loans for bad credit do not require any preparation in order to apply. Naturally, the higher your credit score and the lower your debt burden, the better terms you would be able to get on your unsecured loan. However, for people with acute financial need time is of essence, and many lenders understand that, issuing loans regardless of current credit blemishes.

That is why, you should get a loan regardless of how prepared you are credit wise, provided, of course, that you anticipate to have the means of repayment. Your credit would rise slowly, but surely, with every timely payment made on your personal loan, and several months down the road you may be able to refinance it with better rates and terms, saving money on interest charges.

Loan Underwriting Criteria Is Very Straightforward

Forget about what you see and hear in the news regarding banking industry: banks have always been making money by issuing loans, and they always will, no matter how good or bad the economy is. While they make steps to minimize the risks by verifying the ability of the borrower to repay the loan, they do grant loans to bad credit borrowers, as they make most money from sub-prime lending portfolios, since bad credit personal loans have higher interest rates and fees.

When banks consider your loan application they look at your ability to repay the loan first, and your credit history second. Should you possess a stable income and a long-lasting employment with sufficient ability to take care of your monthly loan payments without overextending yourself, everything else is secondary. Of course, you should be prepared to explain the negative marks on your credit report, but, once again, lenders always consider your repayment ability first. In addition, you should anticipate longer application processing times compared to prime loan applications, as lenders will need to verify your financial stability.

Getting Money Is a Matter of Couple of Days

Applying for a bad credit unsecured personal loan is not as lengthy, as you may think, though. Once you are pre-qualified, a lender would contact you with a list of document they need, such as your paystubs, ID, and references. After all needed documents are gathered, the final decision is a matter of a day or two. After that, sign the loan agreement and watch the loan proceeds appear in your bank account - as simple as that!

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