While having a bad credit is something to work on, taking loan with the credit details is even more difficult as most money lenders and banks do not like to take any risks of non-payments after the due dates and try to find ways to make their customers pay might be an unwanted task, which most banks are not much fond off to do.
There are certain private firms and agencies with no credit check loans depending on their circumstances and other possible assets etc. These agencies sometimes may not have much rules and regulations while also offer promising interest rates without the hassle of security. Such unsecured loans for bad credit might look interesting and appealing, but they are the most unsafe way to take a loan. Here are why it is unsafe and you should avoid and is better still to go for a secured loan.
1. High interest rates
Finding an unsecured loan lender is easier than a secured loan lender as an unsecured lender may not worry much about your bad credit and they have their own ways of dealing with lending credit and in repayments. Most unsecured personal loans and other long term loans usually have high interest rates. But many a times the lender can convince you that it is the available interest rates everywhere and trusting such lenders will only put you in jeopardy. As the lenders do not ask much of the paper work or sureties. Their interest rates are higher than usual and it is wise for you to check the interest rates in all other secured banks. The reason for this is that the lender will be taking a higher risk in giving an unsecured loans for a bad credit and if you default in paying back the loan. Hence, they charge high interest. Nevertheless, you will be paying way much double the amount you might have taken as a loan. Hence, check and compare interest rates of all other secured loans and trying to find a secured loan will be a wise decision.
2. Lands you in trouble easily
As much, as it is nice for you to be free of no much paper works and other rules and can find the credit you needed, in the start all will go fine until you choose to default the lender for some reason. Unless, like secured loans, will not hesitate to give you less time, but he or she can also drag you under the law and make you run for legal suits. A lender will have all rights to put a case on you, if you default and you may have to pay the total amount, late fees as well as the pending interest rates. What is added to your plight is months to years of legal suits. Because of your history of bad credit, it is more likely that an unsecured loan lender can easily win the case. Hence, think before you accept an unsecured loan.
3. Hidden rules and regulations
While signing on the papers to take a loan, all the picture we get is an unsecured loan is an easy way of getting credit, while many a times we fail to understand a few rules and terms of the lender. An unsecured loan lender has their own set of terms and conditions which are more difficult to meet than a secured loan lender.