Unsecured loans are one option to consider when it comes to alternative loan plans, whereby a lender will extend a loan based on the borrower’s creditworthiness, instead of tangible collateral such as property or other assets. Provided you meet certain eligibility requirements, you’ll be able to obtain a loan without having to place any valuable property as collateral, which can be difficult to do especially if you’re already going through a tough time.
With the arrangement being so different from conventional loans, the consequences are different as well in the event of a default. While the lender won’t be able to claim any property, he will be entitled to go to court or have a collection agency collect the debt for him. The court can find in the lender’s favor and end up ordering a lien to be placed on your mortgage, or deduct amounts directly from your wages or even order you, under threat of punishment, to pay the debt outright.
Therefore, it’s very important to be sure that you can manage to obtain an unsecured loan. Today, we’re going to go over a few tips to make sure that you qualify for such a loan, and in the process become able to manage it more effectively as well.
The first requirement is that the applicant must be employed and make a minimum salary of £15,000. While the number may seem arbitrary, the requirement itself is not. This is a strong indicator to lenders that you’ll be able to meet your payments. So, if you have a good paying job at a reputable company, the chances of you securing a loan are higher. Some lenders may even have an age restriction, with the average required age of applicants being listed as 23 years old.
It also helps if you have a good credit rating and haven’t missed credit payments before or defaulted on a loan. It’s not difficult to confirm your credit rating, as you can contact one of the three credit bureaus for a copy of your credit report. As a consumer, you’re entitled to one free copy a year from these bureaus. Review the contents of the report carefully and ask for advice from an expert if needed. If you find any discrepancy, be sure to contact the bureau and resolve the matter. Make sure all your payments are on time and try to pay down some of your debts before applying for an unsecured loan. The bigger your debt is, the smaller the chances of you securing a loan.
It also helps if you don’t own a large number of bank accounts. Ideally, one savings and one current account is the best way to go, but if you have any more than that, then you should be prepared to justify their use. This may be personal information but if a lender is going to extend a loan, they’ll want to make sure their investment is sound.