High Risk Personal Loans

If you have a bad credit history and no collateral to put up, getting into a financial bind and needing a personal loan can be very frightening.  You need money now, but do not know how to get it.  When this is the case, high risk personal loans may be your best option.

There are many types of credit scorers that can apply for these loans.  These include:  borrowers having defaults, borrowers who have made late payments, borrowers who have numerous debts, borrowers who have filed bankruptcy, borrowers who have arrears, and borrowers who faced CCJ or IVA in past.  So if you have credit problems, one of these loans may be for you.

High risk personal loans are considered such because the borrower has a poor credit history and no way to guarantee repayment of the loan, meaning that the lender is at a higher risk of not getting the loan repaid.  Because of this risk, lenders usually provide these loans at a higher interest rate.  This may mean that you have a higher monthly payment, or that it will take you longer to repay the loan.  Taking longer means that you will end up paying more for the loan over time than you would if you had better credit.

High risk personal loans can be obtained from most traditional lenders such as banks, financial companies, and lending companies.  Rates and loan amounts can vary from one institution to the next, so you will want to shop around to find the deal that is best for you.

High risk personal loans can have both advantages and disadvantages.  For instance, one advantage is that a high risk personal loans offer financial solutions to people who may not qualify for a loan otherwise.  If a financial crisis occurs in the future, there is no fear of the bank repossessing the item put up for collateral.  There is also less paperwork to do to qualify for the loan.  Using a high risk unsecured personal loan may help people with a bad credit history rebuild their credit rating, which in turn will allow them to get better loan offers in the future. 

This does not mean that there are no disadvantages to getting a high risk personal loan, however. These loans often carry higher interest rates, so if the principal is not paid off quickly the borrower may end up paying significantly more than the item purchased was originally worth.  The lender also may not offer much leniency for a late or missed payment.

You will want to research all of your options if you are considering a high risk personal loan because of these reasons.  If the item that you were considering purchasing is something that is nonessential, you may find it more beneficial to work on improving your financial history first so that you will qualify for a better rate.  On the other hand, you may find that making your payments on time with the high risk personal loan is the fastest way to rebuilding your credit.  Never take the first offer that opens up until you have looked into other offers from other institutions.  If the whole process is overwhelming to you, a professional financial advisor can get you the help you need in making the decision.