$20,000 Unsecured Loans: The Truth Behind Getting Approval

To some people, the ability to secure approval on a large loan despite a bad credit score hanging over them is something of a mystery. Getting a $20,000 unsecured loan, for example, should be next to impossible, but there are ways to negotiate a the system and come out with the funds that are so vitally needed.As is the case with all systems, there are ways around the common issues. It is important to know exactly what it is that lenders are looking for, and if necessary to work towards providing them. Of course, there is no such thing as a guaranteed large loan approval, but by developing an application strategy, the odds of gaining approval are greatly increased.So, where can we start when applying for large unsecured loans with bad credit? Well, the first step is to understand what type of loan we are applying for, then taking it from there.What Does Unsecured Mean?The difference between unsecured and secured loans is the collateral provided by the applicant. When seeking a $20,000 unsecured loan, of course, there is no collateral (otherwise called security) provided, and this places the applicant at a disadvantage.The benefit of having collateral is that the lender has something to get as compensation if the borrower defaults on the loan. In this way, any potential losses are covered - though the lender does have to go to the bother of converting the item (perhaps jewelry, a car or home equity) into cash. But collateral is one way to get as close to guaranteed large loan approval as possible.When it comes to applying for large unsecured loans with bad credit, there are other ways to increase the chances of getting approval. These relate to two factors in particular: the debt-to-income ratio and finding a cosigner.The Debt-to-Income RatioThe difficulty in getting a $20,000 unsecured loan approved really lies in the lender being sure that the repayments will be made. In the absence of any collateral to offer as compensation, the income of the applicant is the only thing to go by. However, even a large income of $10,000 per month is not necessarily enough to get the green light.Debt-to-income refers to the amount of debt that an applicant has in relation to their income. The ratio, which sets a limit of 40% of an income for use in repaying debts, is designed to prevent borrowers from over-extending their debt. Guaranteed large loan approval might not exist, but if the available income is well within the 40% limit, then there is little reason for the application to fail.So, if an applicant with a large income and an excellent credit history applies for a large loan, they might see their application falter. But a lower-income applicant seeking a large unsecured loan with bad credit could be approved.The Value of a CosignerThough not technically considered security, the use of a cosigner adds a huge amount of security to a loan application. Even a $20,000 unsecured loan can be approved to someone with low credit scores because a cosigner is included in the application. This is because the cosigner guarantees that the monthly repayments will be made, even if the borrower is unable to make them.This is as close to a guaranteed large loan approval as anyone can get, but the trick is to find someone willing to take on the responsibility. Even when someone willing is found, they must have an excellent credit history and a large enough income for the lenders to accept them. If they do, however, getting a large unsecured loan with bad credit becomes very likely.