It is no secret that loans can be lifesavers, especially when they are used to clear some existing debts. Of course, their effectiveness does depend on the terms they are secured with. But the usefulness of long-term unsecured loans in times of great financial pressure cannot be denied.
Typically, these kinds of loans can range in size up to $25,000 and can be repaid over 5 to 7 years, depending on the lender. However, they can be difficult to get approval with bad credit scores unless there are ample signs that the loan is affordable.
And as with all unsecured loans, the interest rate charged to those with poor credit scores can be quite high – in some cases as high as 20%. But the opportunity to access much-needed funds, and set about addressing financial troubles is too good to ignore.
But what about when these long-term loans are not within your grasp? What are the options available to bad credit borrowers, and what terms can they expect? Here are 3 worth considering.
These loans are the best to seek if the applicant is in need of a modest sized loan – for example $5,000. Normally a traditional bank would expect this sum to be repaid within 2 years, with monthly repayments of $220. However, as long-term unsecured loans, the term can be as long as 5 years.read more from http://fijivillage.com/news/-Be-aware-when-taking-out-personal-unsecured-loans—Consumer-Council-of-Fiji-5k9r2s
The longer term means that the monthly repayments are much lower, but be aware that it also means the interest rate is higher and the amount of interest paid over the lifespan of the loan is greater too. In fact, typical APR can work out to be as high as 55%.
As an option for those seeking loan approvals with poor credit scores, the chances of approval are very high. But the crucial factor is that a homeowner is needed to act as a guarantor for the unsecured loan.
The most positive aspect of this loan option is that a guarantor is not required. But the result is that only a limited sum of money is available, and the APR can be as high as 300%. It is not a long-term unsecured loan since its repayment term is only 12 months.
Those are the fast facts, but under closer scrutiny, it is obvious that this is an expensive investment for a limited return. For example, the loan limit is just $1,000 but as much as $3,000 is paid over 12 months to clear the loan – that’s $250 per month.
Still, for those seeking approval with poor credit scores, especially in the case of financial emergencies, this is a credible option, with approval for this unsecured loans granted and funds made available within 24 hours.
This is arguably the most expensive loan available on the market, but the actual overall cost depends on the sum borrowed. Of course, it is not really a long-term unsecured loan since the repayment term is when the borrower receives their next paycheck.