The lending world has changed a lot over the past few years. Gone are the days when lenders only offered loans to people with near perfect credit. That’s because, as in any industry, people and businesses need money to grow and stay competitive – especially if they wish to do so during a recession.
As such, there are now several ways for people with bad credit history or none at all to get access to cash that will enable them to get back on their feet financially and move forward again.
One method is to apply for a guaranteed loan. Guaranteed loans, also known as signature loans, are unsecured consumer loans that are based on your creditworthiness rather than on collateral. That means that if you’re turned down for a bad credit loan, you can still get an unsecured loan that is less expensive than other similar loan types and has no collateral.
Many online lenders offer this type of loan, but there are certain factors to consider when obtaining one. This article will detail those factors so you can make the best choice for your situation.
Key Considerations for Guaranteed Loans for People with Bad Credit
There are three key points of consideration when you are considering guaranteed loans for bad credit. First, the lender will want to see proof that you already have a source of income. Second, the lender will want proof that your credit is not too good. Finally, there is also the matter of qualifying for a guaranteed loan.
1) Proof That You Already Have Income Sources
With a guarantee loan, the lender does not consider your credit history when assessing your ability to repay the loan. Instead, they consider your income and financial status currently as well as whether or not they can see a steady stream of future income coming in. If you’re self-employed, this will be easier. If you’re applying for a guaranteed loan when you already have a job, the lender may want to see pay stubs and other documentation to ensure that your income is steady and reliable.
2) Proof That Your Credit is Not Too Good
If the lender sees that your credit is “too good” they will consider you a risk because your income may not be enough to cover all of your expenses. While this seems confusing, it makes sense when you think about it because people with bad credit tend to live within their means and don’t have much extra cash lying around to cover unexpected expenses.