Getting Unsecured Loans is an Effective Solution to Cash Problems

The realities of the lending industry are such that those who apply for loans, and are willing to offer something as collateral, are much more likely to secure large personal loans than those who are not. The risks involved in granting unsecured loans mean that lenders are happier to be given an item to claim in compensation should the borrower default on the loan.The problem is that not everyone has assets that are sufficient to cover larger personal loans. This means that only the approval of unsecured loans can provide the kind of cash injection needed to meet our debts, or even to consolidate our debts into one loan.The task of getting that approval is not easy, but it is not impossible either. The fact is that by taking some carefully measured steps and preparing the way before making an application for a loan, the chances of loan approval despite no security are greatly increased. The good news is that none of these steps are particularly difficult to complete.Improving Credit ScoresMost of us have credit ratings that are not perfect, but by improving our rating we provide lenders with greater reason to be confident the unsecured loan will be repaid on time.The best way to improve ratings is to take out a small personal loan that can be repaid without much stress. For example, a $1,000 loan can clear some outstanding bills, or help to lower credit card debt, but can be repaid over a few months, prompting a credit score increase. Thus, the approval of unsecured loans of larger sums are made more likely in the future.However, larger sums can be borrowed immediately if a longer term is agreed. Getting loan approval despite no security is possible because, while the principal may be large - perhaps as high as $25,000 - the repayment schedule is longer and so the monthly repayments are lower.For example, an unsecured loan of $25,000 can be repaid over 5 years with monthly repayments of $550, but over 10 years the repayments may only be $350 per month. True, the amount of interest is almost double, but the loan is very manageable.Get a CosignerPerhaps the most effective way around the collateral issue is to include a cosigner on the application, something that often seals the approval of unsecured loans. This is where an individual (usually a family member) offers a guarantee to the lender that the repayments will be made on schedule, by promising to make the payments themselves should the borrower fail to.However, it only really works as a way of ensuring loan approval despite no security if the cosigner has a good credit history and a proven stable income that can cover the monthly repayments. Choosing the right person as cosigner is, therefore, important.Finding a LenderOf course, the right lender is just as important a part of the whole process as the cosigner or credit rating. An unsecured loan from the wrong lender can prove extremely expensive, especially in the long term.It is essential that applicants read the small print included in any loan agreement, and that they check out the background of any lenders they are unfamiliar with. The approval of unsecured loans is sometimes too easy, especially with online lenders, and so checking with the Better Business Bureau is a good idea.Getting loan approval despite no security is certainly not impossible, but thinking ahead can mean the route is smoothed over a little. And it is worth the effort if the unsecured loan can raise the much needed extra cash to consolidate existing debt or meet that unexpected expense.