No Collateral Loan with Bad Credit

When bad credit reports are on the increase more and more people turn to alternative methods of financing. Bad credit reports result from people paying late, or missing payments on credit cards and loans. The cause may have been through being irresponsible with handling money or experiencing a financial set back such as temporary unemployment. Even someone with any credit dealings at all is going to be considered a bad credit risk, as they have no history to make a risk assessment on.

Unsecured loans, or no collateral loans, do not require the borrower to provide any collateral against default of payments. Dependent on the borrowers circumstances instant no collateral loans have never been more easy to obtain. It all depends on what they are needed for and for how long.

The average working person who has a reasonable monthly income and a bank account, may well have a bad credit report and most likely be turned down for a loan by a reputable lender. It could even be a case that the person is not sure if an application would be granted by their bank and would prefer to just obtain a short term loan instantly.

In such a scenario there is an abundance of online or in store cash advance pay day loans available. With no credit check at all required, as long as the person can provide proof of income and of having a bank account, an instant loan can be approved. It may not be the ideal way to obtain a loan but the advantages are that no credit check is needed; no collateral is needed; a bad credit report does not matter; and the whole procedure is quick.

The interest rates are high but as long as repayment is made as agreed then the total repayment costs are known in advance. Often too, a person may only need a loan for a small amount, which they are confident of repaying with the next pay check. As the repayments will not be reported to the credit bureaus though, they do nothing to improve ones credit history.

It is also possible to obtain no collateral loans with bad credit to help with debt consolidation, but these loans are more long term, and will come with high fees and interest rates. They are usually obtainable through debt consolidation schemes and the borrower would do better to try and deal with over due creditors themselves to reduce debt and improve their credit report. A more viable solution would be to find someone to endorse a unsecured personal loan for you to consolidate your debts in one go, rather than trying to obtain a no collateral loan yourself whilst you have bad credit.

It is possible to obtain unsecured personal loans with bad credit, but it’s a very expensive option. A short term one for a low amount which you are confident of repaying can be a short term solution for the need for emergency funds, but overall it is better to improve your credit history before taking on additional loans. The fees which you will end up paying could be used towards your existing debt. If you do fall into the bad credit category taking on additional loans may not be the solution for you. Overall it would be better to learn to handle finances through budgeting and saving.