Unsecured Loans for bad credit.
An unsecured bad credit loan is a personal loan which has more flexible requirements than the big, major banks and lenders. These unsecured loans do not require you to use an asset such as a car or property as collateral.
This financing can sometimes be a viable option for people who have negative listings on their credit file but still need access to credit. Due to the higher risk to the lender, your loan may have a higher interest rate.What types of unsecured bad credit loans are available?
What to consider if taking out an unsecured bad credit loan?
Before applying for an unsecured bad credit loan, you should take the following into consideration:
- What fees are involved?
Lenders are restricted as to what fees they can charge you. For loans up to $2,000 you can be charged a 20% establishment fee and a 4% monthly fee. For loans between $2,001 and $5,000 lenders can charge a one-off fee of $400 and a maximum annual interest rate of 48% (inclusive of all fees and charges). For loans over $5,000 lenders cannot charge more than 48% which includes all interest and fees.
- What is the interest rate?
For loans amounting to less than $2,000, they are interest-free. Fees charged on these loans are represented as a percentage. That being said, these fees can be considered costly. Bad credit lenders are taking a risk lending to you and without an asset guaranteeing the loan, the costs are going to be higher, whether in the form of fees or interest.
- Who is the lender?
It's also important to check the lender's reputation before you borrow from them. The internet has made it easy for dodgy lenders to appear reputable, so make sure you read all the terms and conditions and compare your options before you apply. You can also read online customer reviews for lenders to see other people's borrowing experiences. Never submit any payment to a company online to receive a loan.
The features you can expect with unsecured bad credit loans
These loans offer people with bad credit a secure option through which they can access money. These loans also offer the following features:
- Apply conveniently online
Lenders who offer unsecured bad credit loans generally have online application forms and online approval systems available, making it easy for you to apply.
- Choose from a range of options
These type of loans are a viable option if you need to consolidate your debts or if you have negative marks on your credit file.
- Have fast access to your funds
You can normally receive the funds into your account on the same day you apply. At the latest, lenders can have your approved loan to you on the next business day.
- Repay according to when you get paid
Lenders will usually structure your repayments according to your pay schedule. Depending on the lender, you will usually have the repayment amount direct debited from your account on the repayment date – no need to remember to send your funds across.
Are you eligible for a loan?
These type of loans have flexible lending criteria when it comes to your financial circumstances. Generally, you will need to be over the age of 18 and be able to demonstrate a regular income. You will also be required to list any other assets and debts you have and some lenders may require you to be employed, although you can be considered for a loan if you receive Centrelink payments as income.
Unsecured bad credit lenders look more at your current financial situation rather than defaults or negative listings on your credit history.