Bad Credit Personal Loans Guaranteed Approval

Bad credit personal loans that offer guaranteed approval really seem too good to be true? How can these companies really guarantee approval? Are there any restrictions or stipulations placed on this guaranteed approval that you need to be aware of? Are there any disadvantages of bad credit guaranteed approval loans that you need to be aware of? We will explore these questions and more so that you can better understand how bad credit personal loans with guaranteed approval are right for you.

How Does the Loan Work?

There are actually a variety of bad credit guaranteed approval loans. Many of the bad credit guaranteed approval loans are considered “pay day loans.” However, there are other types of bad credit guaranteed approval loans that you may qualify for. Understanding the differences can be extremely important if you need a loan for more than just a short term cash advance.

In pay day loans, you are allotted a specific amount of money. There is generally a limit to this amount of money and it is usually based upon your income level. Some pay day loans will allow you to use collateral if you need a larger amount of cash but your re-payment to the loan company cannot exceed your income level. Re-payment is scheduled around your pay schedule. You must either pay the full loan amount or renew the loan and repay the interest. This is often a frustrating cycle for some people.

Other types of bad credit guaranteed approval loans are likely to have a lending limit as well. However, your limit is generally much higher because repayment holds a closer resemblance to that of a conventional loan. You have a set and predetermined amount of money, which includes a portion of your interest as well as a portion of the loan. The repayment schedule can vary, depending on the lender used. You may or may not have to use collateral for this type of loan.

How Does Guaranteed Approval Work?

Bad credit loans with guaranteed approval are not exactly guaranteed. They are, however, much easier to qualify for. You must meet certain requirements, which include a minimum amount of income, income stability, and reliable references. You do not have to have great credit, however.

Bad credit loans with guaranteed approval allow you to have credit blemishes. They may pull your credit report. However, your credit report will not hold as much weight in a bad credit guaranteed approval loan as it would in a conventional loan. Even individuals who have judgments, collections, and previous bankruptcies may qualify for these loans. There are a few restrictions that you need to be aware of though.

If you have a bankruptcy that is still being processed, you will probably not quality for a bad credit guaranteed approval loan. Bankruptcies that are not currently in default are still open for new additions so the denial of your loan application is less about your credit and more about protecting the company. If, however, your bankruptcy is in default, it is unlikely to have an impact on your loan application approval.

Advantages to Bad Credit Guaranteed Approval Loans

For some individuals, a stained credit history can make it impossible to receive approval for a conventional loan. However, there are situations in life in which a loan may desperately be needed. Since the approval criteria are much easier to meet, even an individual with credit problems may be able to get the funds they need. This can enable you to purchase a car, purchase a home, start a small business, pay overdue bills, and more. There is rarely a limitation on what you can use the money for. However, it is important that you check to be sure that there are no limitations on purchases made before applying for the loan.

Disadvantages to Bad Credit Guaranteed Approval Loans

Getting approved for the cash you need sure can feel great. However, there are definitely some disadvantages that you need to be aware of when considering a bad credit guaranteed approval loan. Doing so can help you avoid making a serious mistake.

Interest rates for bad credit guaranteed approval loans are generally much higher than conventional loans. This can be especially true of pay day loans. When you are simply paying the interest, the lender is making money on the amount they loaned you. However, the interest rates are often so high that many borrowers can only afford the interest. This can lead to a vicious cycle that can last for months, even years.

Guaranteed approval loans are rarely reported to the credit bureau, unless you fail to make your payments. This means that you will not receive any credit benefits from your bad credit loan. This can be a little frustrating for some individuals, particularly if they are trying to improve their credit rating.

Advantages and Disadvantages of No Collateral Personal Loans

When looking at loan options, there are two basic types – secured and unsecured. In a secured loan, you are required to offer some sort of collateral. Collateral is something that the lender can take possession of, should you fail to make your loan payments on time. Generally, collateral must be something that is worth a substantial amount of money. Some examples include a house or a car.

Sadly, there are some cases in which you may need a loan but have no collateral to offer. This can be because your valuable assets are already offered as collateral in a different loan or because you don’t own any items that can be used for collateral. This would require you to look for a no collateral loan, otherwise known as an unsecured loan.

There are both advantages and disadvantages to an unsecured loan. By understanding them, you can determine if this type of loan is right for you. It can also help you to know what you should expect from these types of loans before you sign on the dotted line.

Advantages to Unsecured Loans

Probably the biggest advantage to an unsecured loan is that you don’t need any type of collateral. This means that renters, homeowners, car owners, and non-car owners can all have an opportunity to receive loan funds. After all, not everyone has collateral to offer. Or, you may own an item that you could place for collateral, but you are still paying on it and don’t want an additional loan. Whatever your reason for wanting a no collateral loan, you won’t have to worry about any additional risk to your home or car when taking out a loan or being denied because you don’t own these items.

Another notable advantage to no collateral loans is that they are much faster to process. In some cases, you may even be able to get an instant approval. Because there is no deed or title to process or evaluate, processing time is very short. This can be especially true if you are borrowing a small amount of money. In most cases, a credit report, employment history verification, bank account verification, and reference verification is all that is needed. In some cases, you may be able to receive funds the very next business day.

Disadvantages of No Collateral Loans

Sadly, however, this is where the advantages of unsecured loans stop. There are many disadvantages of unsecured loans, particularly for individuals with bad credit. While it may be tempting to look at just the advantages, the disadvantages are an important part of making a smart loan decision.

In most cases, unsecured loans are directed towards individuals that only need to borrow a small amount of money. Without collateral, lenders are rarely willing to take a very big risk. More money, of course, means more risk. If you need to borrow a substantial amount of money, you may want to reconsider your loan plan. The higher risk affects more than just your loan amount, however.

Higher risk always means higher interest. Unsecured, no collateral loans are no different. Without collateral, your lender is basing their lending decision solely on trust and credit history. This can make unsecured loans almost scary for individuals with bad credit. While you may get approved with bad credit, you are likely to receive an interest rate that is substantially higher than you might have anticipated. Carefully consider whether you really need the loan now. If so, consider obtaining a co-signer or going for a secured loan to help reduce the interest rate that you would have to pay on your own with an unsecured personal loan.

Another disadvantage that many individuals are not aware of is that unsecured loans are often less flexible than secured loans. You are likely to find that you must pay a specific amount each month for a specific number of years. If you later decide that you want to pay more or can pay off the loan sooner, you are likely to experience serious prepayment penalties. This can sometimes cancel out any savings you have made from paying the loan off early.

To avoid getting blindsided by extra fees, like prepayment fees, carefully read the contract before you sign. This can help you understand what your terms are and any additional fees that you may face. Making the decision for the type of loan to take out can be a difficult process. However, for some, there are very few options. Be sure that you look at both sides of the coin, no matter how limited your options may seem. In the end, only you can make the right choice for your current and future financial needs.