When applying for unsecured loans, there is a tendency for people to view the whole issue in extremes. On the one hand, people believe that the process is simple and nothing to worry about, while on the other hand, some believe the process is unpredictable and that the odds of approval are stacked against them.
The truth is that, for any applicant, it is possible to gain approval if certain factors are considered and the application is tailored accordingly. Even with a bad credit rating, personal loans approval without security are not out of reach. This is good news, of course, with the availability of the funds raised through such loans, capable of alleviating financial difficulties.
All that is really necessary to achieve guaranteed unsecured loans approval is to have an application that is in order, well structured and convincing, and the key to each of these aspects is knowing what the lender is looking for.
Unsecured versus Secured Loans
The first factor is knowing what exactly the difference between secured loans and unsecured loans is. Basically, it comes down to collateral and the security that a lender has when an item of value is offered in compensation should the borrower default on the loan.
When a loan is unsecured, the lender is at much greater risk of losing money since there is nothing to take possession of in compensation. For this reason, the conditions for personal loan approval without security are stricter. The interest rate is usually higher to counter the greater risk, while the sum limit is lower because the lender does not want to be left at a major loss.
Therefore, the closest to guaranteed unsecured loans approval an applicant can get is to tailor the application to suggest the lowest possible risk.
Most Convincing Loan Applications
There are not many things that an applicant can do to convince a lender that their investment is safe, but requesting a small unsecured loan is probably the best way. For secured loans, it is really just a matter of providing sufficient collateral, but with the unsecured option it is all about reducing the size of the possible losses, and therefore risk.
So, it is considerably easier to gain personal loan approval without security on a sum of $3,000 than on $10,000. It might seem that $3,000 will provide no solution to financial woes but the purpose of the exercise is to build credibility again. A sum that is easy to repay, helps to guarantee unsecured loans approval for large sums in the future.
Once a trend, however small, of clearing loans is established, credit rating improves and trust builds with the lender. Eventually, that $10,000 unsecured loan will be easier to secure.
The Right Loan Terms
Unfortunately, even small loans will come with bad repayment terms, but the monthly repayments are, at least, manageable. As the credit ratings improve, then the terms will become better. Not only will personal loan approval without security become very likely, but the interest rate will fall, the size of the loan sum entitlement will increase and the life time of the loan will lengthen.
While a guaranteed unsecured loan approval is not technically available, with each application considered by the lenders on its own merits, the likelihood of approval is greatly increased.
Getting approval on an unsecured loan is not difficult if the application looks good. Get that right by satisfying their criteria, and the rest will follow.
Mark Venite is the author of this article and a successful financial advisor with 20 years of experience. He helps people to get approved for Bad Credit Personal Loan and Student Loans with Bad Credit. For more information about his services please visit him at AccessMyLoan.com
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