Nobody wants a poor credit history because it reflects that you are not liable to your previous lenders. In a real scenario, most of the people face terrible financial situation due to which they are not able to repay the money on time and eventually it affects on their credit report.
With borderline credit score, getting loans from traditional lenders may be difficult because they consider the people with thin credit as a risk. In this case, you can also look for another alternative, which is most trending these days. Here it refers to loans for bad credit people in Ireland.
However, it depends that which type of loan you are choosing, it may be unsecured or secured loans. Now, the question arises that which one is good for you?
We have covered both the advantages and risks of these loans.
Let’s start with unsecured loans with bad credit and then move to the secured types
Unsecured Loan for less than perfect credit score
These are the loans where you do not have to provide any guarantor or security to get funds.
Benefits of Unsecured loans
There are many advantages you can get from it. We have covered some major ones below:
- Easier to obtain: The process of application is hassle-free. You can get the funds within an hour and in some cases, you can get in minutes.
- Do not require any security: In this, you do not have to lose your property. If you fail to repay the borrowing amount, then it will become the default and will reflect on your credit report. But the lender has no right to seize your property against the loan.
- Chance to improve the credit score: If you can repay the loan on schedule time, then it will affect your report positively. You can consider this an opportunity.
- Minimal documentation: No documentation and no lengthy process is what unsecured loans are.
- Additional flexibility: You can use the money to raise business or for some other purposes. The mode of payment can be changed in case of an emergency. All you have to constant the lender.
Risk of taking unsecured loans
We have covered a few risks such as:
- High-interest rate: No doubt, providing funds to one with a bad credit score is equivalent to risk. To overcome these problem lenders may charge the high APR. You should be aware of the amount that you can easily repay in the future.
- Small amount: You will not get a large fund which is possible in case of secured loans with bad credit that we have discussed later in this blog.
Secured Loan for borderline credit holders
In this type of loan, you will not receive quick money without showing any security. Nevertheless, many online lenders in the UK offer loans with no guarantor too.
This loan has many benefits, let’s have a look at them.
Advantage of secured loans
- Get a large amount: If you need money for big goals, then secured loans are the best options. In this, you need a guarantor or security to secure good money.
- Low-interest rate: As you are providing the guarantor or security the interest rate will be less as compared to the unsecured ones. It is the major benefit of the secured type of loans.
- Repayment flexibility: In this type of loans you can vary the scheduled time but not quite often. You can do this if you met with an emergency and won’t able to provide the funds.
Risk while choosing secured loans
There are a few risks and you can read them below:
- Risk of losing security: It is one of the main reasons why people afraid to take these loans. If you fail to repay the borrowed money on schedule time for some reason, then you may lose the security.
- Paying more amounts: These are the loans that may vary from 1 year to 5 years. It means you have to pay an interest rate for a longer period.
These are the advantages and risks that you have to consider while choosing these loans. Now, in our opinion both types of loans are correct and it is depending on your needs. If you require large money for long term goals, then secure loans with bad credit may be a good choice otherwise unsecured may be an ideal choice.