Due to the current financial situation, a growing number of companies are either downsizing or closing, and they're firing folks, laying them off, or both, and more and more employees are finding themselves working for companies that don't offer either medical or dental benefits.
The number of folks getting seriously into debt is therefore rising, and the number of folks with a good to excellent credit rating is shrinking. The reasons that people get into debt are numerous and aren't simply because a person loses their job, or because something unexpected occurred.
People also get into debt because they live beyond their means, they over rely on credit cards, or in the case of many baby boomers they simply feel that tomorrow might never come, so they just live for today.
In the case of mounting debts however, tomorrow does come, and it comes in the form of worsening credit ratings, unwelcome knocks on the door, and often bankruptcy.
The United States is now paying the cost of living on borrowed money, but many of its politicians surprisingly believe that creating more debts is the way to get out of debt, and they ignore the vast majority of Americans that are cautioning them.
Getting a secured loan is easy, but risky. You simply sign to say that if you default on the loan, that the lender gets the rights to something that you own, and that something is generally worth more than what you borrowed.
If your collateral is worth less than the amount that you want to borrow, then you'll most likely pay a higher rate of interest.
The banks made a big blunder with recent real estate of course, because they offered 95-100% loans, believing without any good reason, that house prices just had to keep going up, which of course they couldn't and didn't.
So Why Are So Many People Now Applying For Unsecured Loans?
The first and simplest answer is because a growing number of people no longer have anything to offer as collateral, and if they do have something, then they don't want to use it, because they're worried about losing their jobs, or about their spouses losing their jobs, about sickness, getting their working hours shortened, and any number of other very good reasons.
What Are People Using Their Unsecured Loans For?
Many people are now taking out unsecured loans to pay for education, and I don't mean their children's education, which might also be a good reason. They're taking out unsecured loans so that they can get retrained and get a better job than the one that they presently have, or had.
They are also being used for debt consolidation, repairs to property or an automobile, to pay for medical bills; and some lucky folks are even using them to pay for a vacation.
Can Anyone Get An Unsecured Loan?
Almost every bank will lend to somebody that has a reasonably good credit rating, but not every lender will loan to someone who has bad credit. If your credit is bad then the good news is that, the growing number of people whose credit recently got spoiled for one reason or another, means that there is also a growing number of lenders to meet the need.
It would be nice to say that the banks that make unsecured loans to people with bad credit are run by altruistic people with hearts of gold, but they're not.
It should be said however, that those who lend to people with bad credit are often more willing to check and see if the would-be borrower once had good credit, and they're more likely to understand that something simply went wrong in his or her life. They're also more likely look to see what you want the money for, and if they see the reason is a good one, then you'll have more chance of getting the loan at a lower rate of interest.
It is of course possible to get a no questions asked, no collateral, bad credit loan, but the interest will be very high, and you should only take one out if you have no other choice. If you have no other choice, then make sure that you'll be able to pay it back on time, because if you don't then you'll be jumping right out of the proverbial frying pan and into the fire.
Whichever type of loan you finally decide to apply for, you can be certain that if you pay it back on time, that it will increase your credit score. If you repay a secured loan, then you'll get a few additional points added; if you pay off an unsecured loan then you'll get more points added; and if you pay off a bad credit, unsecured loan on time, then not only will it help your credit rating in a big way, but if you ever need another loan it will be whole lot easier to get, and the interest will be lower.
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