Guaranteed Unsecured Loans
Unless you have a pile of cash stashed away, you should avoid getting a guaranteed loan. Not only do guaranteed unsecured loans give you a high-interest rate with bad credit, but it can also cost you thousands extra. If you have never made more than minimum payments on your credit cards, it is harder to maintain a maximum credit score. When you take out a guaranteed loan, you will have to pay a high-interest rate simply because you are perceived as a big risk. This is something that could lead to thousands of dollars in additional fees over the life of the loan.
What Are The Consequences Of Bad Credit?
A guaranteed loan will get you a high-interest rate. If the borrower has bad credit, he or she will get a higher interest rate when taking out a loan. If it is a personal loan, the borrower will not be able to get a lower interest rate; the only thing that is available to do is a loan with no fees. Some people believe that they will be able to take out guaranteed unsecured loans and not have to pay a higher interest rate. There are some reasons why they believe this.
The most obvious purpose for taking out a guaranteed loan is to consolidate high-interest credit card debt. However, unsecured debt consolidation loans do not actually work by lowering the interest on the debt. Instead, they transfer the debt from one place to another, enabling the borrower to pay the debt at a lower rate. While the loan can put small consumers at ease, the fees that have accrued can significantly push the price of debt up. These extra fees can cost an extra $100 or more each month. Even more expensive fees will be applied to your loan. This means that many borrowers will find themselves paying off an additional fee on top of a higher interest rate. All of the fees can end up being paid off several times over.
Other Consequences Of Bad Credit
It is also difficult to get approved to get an unsecured loan when you have bad credit. However, some collateral is required. There are bank accounts with a good record of repayment. The balance is likely to improve if you have been making monthly payments on one account. Banks are more willing to make a loan to other people who have a positive credit record. When a new loan with low interest can save you hundreds and even thousands of dollars in fees, why not take the chance?
Your credit record will still matter when going for a guaranteed loan. The bank will consider your credit record to decide whether or not to grant your loan. If you have been with the same credit card company for a long time, they will unlikely want to go out and loan money to you. That is, if they will even try to loan money with bad credit. Shopping around for the best loan can save you money. Just make sure that you know exactly what all the terms and conditions are before going on. Making arrangements with the financing institution also gets you a better interest rate. If you do get approved, your payments will be lower. This, however, could be the worst possible time to take out a guaranteed loan. Make sure you get both the secured and unsecured loan from the same lender. This will make it easier to pay off your loan, and your credit score will gradually improve if you continue to make on-time payments.
