With the economy still sitting on shaky ground, many people will find themselves in need of additional cash. To that effect, the addition of a $20,000 unsecured loan could make all the difference in terms of security and peace of mind. Since many people are really afraid of the consequences of using secured loans, that is, losing the house or car used as collateral, unsecured loans are really a great option. But, what are the qualifications? What can a person do with bad credit?
Understanding Unsecured Loans
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One of the problems that many borrowers encounter when looking for a loan is an honest misunderstanding of what they want and what each type of lending option truly means. An unsecured loan as opposed to a secured loan is an important distinction to make. Both are available, but one is easier to come by than the other.
Unsecured loans are those loans which are given to a borrower without any guarantee or collateral backing. What this means, essentially, is that the lender gives the borrower money, the borrower signs a lending contract, and the lender hopes for the best. From a lender's perspective, this is a huge risk. From a borrower's perspective, this is a much better option than the alternative.
In contrast to an unsecured loan, a secured loan is given to the borrower under the conditions of collateral. That means that the value of the loan is supported by some type of real property that holds the same or greater value and can be repossessed should the borrower fail to pay their loan. This is why these loans are "secured." The property put up against the loan, which is usually a home, insures the lender that there is some recourse should a borrower fail to pay. The borrower, on the other hand, risks more than his credit score.
Clearly, from the borrower's perspective, an unsecured loan is the favored option. However, secured loans are generally easier to get. They also carry the benefit of lower interest rates and are often offered for higher amounts. With the right amount of security, even a borrower with bad credit can get a $20,000 secured loan.
Getting a $20,000 unsecured loan, however, is generally limited to those people who have a combination of a high income and a high credit score. Borrowers need to prove that they have been responsible before with their money and that they have the means to be responsible again.
Getting a $20,000 unsecured loan is not a simple process, even if the borrower has great credit. There still needs to be an application and an evaluation of the borrower before any money changes hands. However, to speed up this process as well as ensure borrowers that they are getting the best deal possible for their loan, the use of a broker or internet lenders is preferred. That way, borrowers can look at more than one offer and pick the one which best suits their needs and abilities. This same process can be used for borrowers with bad credit looking for loans in smaller denominations.
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