High Risk Personal Loans – Fulfill your financial need and improve your credit score
Are you someone with a poor credit history and no high value collateral to offer to get a loan? If the answer is ‘yes’ then you may look at the high risk personal loans for your financial needs. Read through to know more about high risk personal loan.
What is a high risk personal loan?
A high risk personal loan is a personal loan meant for people with a poor credit history. It is so called because the poor credit history coupled with the unavailability of collateral makes giving out such a loan a high risk proposition for the lender. Since risk is proportional to the interest rates on offer from the banks, rates tend to be higher in case of high risk personal loans.
There could be multiple reasons why a borrower would be in the high risk category so the lender is likely to take all that into account while extending a loan.
A high risk personal loan can be either a secured or an unsecured loan. A secured personal loan would require the borrower to pledge a security where as an unsecured personal loan would have no property guarantee. The unsecured loans typically have a higher rate of interest than the secured loans.
Who should take these loans?
People get categorized under poor credit history for their past mistakes like defaults in the loan repayments etc. Many a times the customer is unaware that he/she is being categorized under the poor credit history bracket. The high risk loans would be useful to such people. The borrowers can also use these loans to make their credit history better. Timely repayments made over the loan period can help the borrowers in improving their credit score. The borrowers should ensure that the lender reports his/her credit performance to the credit agency.
Some people who have a bad credit history and are homeowners may not like to put their home as collateral. Such people may find these loans useful.
Borrowers with a low to moderate level of income may also find these loans useful.
How can these loans be used?
A high risk personal loan can be used for holidays, education, wedding, home improvement etc.
What are the advantages of these loans?
High risk loans offer the following advantages to the borrowers:
They offer various loan options to the borrowers depending on their financial situation.
They give the borrowers a chance to improve their credit score by repaying the loan amount in time and in full.
It is easy to obtain these loans with a poor credit score even if the borrower is not a homeowner or for that matter can’t offer a collateral of significant value.
A last word for the borrower….
With the arrival of the online lenders it has become easier for the borrowers to browse through the different loan options, compare them and then choose the best one. The borrowers can use the online option to do adequate research and see for themselves the cost and benefits of the different loan options.