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$25,000 Unsecured Loans: How to Overcome Approval Problems

April 05, 2012 | Comments: 0 | Views: 151

Nothing is for certain when it comes to finances, as only too many people can testify following the economic crisis we have been in these past few years. But with some careful preparation, the level of uncertainty can at least be reduced. This is especially useful when applying for $25,000 unsecured loans.

Even at the best of times, large unsecured personal loans can be difficult to get. This is due to the lack of collateral, and the security that it automatically provides. The risks are higher, and so lenders are more hesitant to give the green light to the application. But there are some measures that can be taken to convince lenders that their money is safe.

The core concern for any lender is that borrowers will not default on repaying the loan, so getting personal loan approval without security really comes down to building their confidence around the fact that the borrower will meet their financial obligations.

Lack of Collateral

The significance of collateral cannot be underestimated, especially when seeking a $25,000 unsecured loan and sporting a low credit score. In fact, unsecured loans are more difficult to get simply because the only factors that the lender can assess the application on is the income that the applicant is earning.

Collateral, quite simply, provides a form of compensation for the lender to use if they borrower were to default on repaying the loan. In the case of large unsecured personal loans, worth $25,000 or more, that means a lot of money can be lost. But by making the loan secured one, the lender is more willing to take the risk.

What is more, the high interest rate, which would normally be very high with a personal loan approval without security to reflect the perceived degree of risk, tends to be much lower, thereby reducing the size of the monthly repayments.

The Value of a Cosigner

If there is no way of getting collateral to cover a $25,000 unsecured loan, then finding someone to act as a cosigner is the next best thing. In fact, in many ways it is better, since with collateral there is always the chance that the borrower loses the item.

Cosigners, on the other hand, are people who simply agree to make the loan repayments in the event that the borrower is unable to. They are usually a family member or a friend, but have to have at least a very good credit rating and have an income large enough to cover large unsecured personal loan repayments.

This can sometimes be the problem when searching for a suitable candidate. It is worth keeping in mind that the lender has to approve the cosigner before they will be willing to agree to personal loan approval without security.

Improve Your Credit Rating

If getting either collateral or a cosigner is impossible, then the only method of improving your chances of getting approval on a $25,000 unsecured loan is to improve your own credit rating. However, this is an option that tends to take time.

Taking out and repaying in full a series of small personal loans will see your credit rating increase, so when looking for a large unsecured personal loan there is a track record of repayments.

This is exactly what a lender wants to see, and makes them feel much more comfortable about granting personal loan approval without security.

Want to learn more about Guaranteed Bad Credit Personal Loans and Bad Credit Home Loans? Visit Mary's site at badcreditloanservices.com

Source: EzineArticles
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