Guaranteed Unsecured Loans: Pros and Cons to Consider

The single biggest concern for consumers with mounting debts is where they are going to get the cash necessary to clear the debt. But the good news is that there are lenders offering guaranteed unsecured loans to borrowers, even when their credit scores are extremely low. This is the fast route to the cash that is so desperately needed.Of course, when a loan is advertised as guaranteed, and fast loan approval is promised as standard, that does not mean the money is available to anyone who comes along. There are criteria to satisfy, but the ability to satisfy them is made easier by virtue of the straightforward nature of the application.And there are compromises to accept, with the interest rate charged high and the loan limit low. These are small concerns when the pressure to get the unsecured loans necessary is acute. So, what are the key areas that applicants need to know when looking for these loans?How a Loan Can Be GuaranteedThe first question most applicants ask is how a loan can possibly be guaranteed. Technically, no loan application is 100% certain to be approved, so a guaranteed unsecured loan is qualified to a certain extent. Generally speaking, an application process has two stages: qualification and assessment. But in this case, there is only one: qualification.The two-stage application establishes, first of all, whether the applicant qualifies for the loan. Lenders look basic criteria, like age (over 18) and nationality to see if they are legally entitled to the loan, and the income source to see it they are capable of repaying it.The second stage involves checking the credit history of the applicant to establish if they can be trusted to maintain repayments. This generally makes fast loan approval impossible because of the time taken to do this.However, if the credit check is left out of the system, and approval is granted on current income rather than past record, then the unsecured loan can be granted more swiftly and more confidently.High Interest, Low Loan LimitsBut lenders expect a payback for the faith they place in bad credit borrowers, and this is where the compromises come into the equation. For example, a guaranteed unsecured loan will be available with a higher rate of interest charged, and usually with a very short repayment period. Both conditions reduce the degree of risk that the lender faces.For the most part, fast loan approval is available with payday loans, because the repayment is made in one go directly from the next paycheck. The interest rate is extremely high, perhaps as much as 25%, which means the lump sum to clear the loan is very high.Loan limits are generally low too, with $1,500 the maximum available. That means that the full repayment due on the unsecured loan is $1,875.Fast Loans, Fast RepaymentPaying $375 in interest for a guaranteed unsecured loan might not seem so bad, but the repayment term is typically very short too, ranging from 14 days to 30 days. And when the full amount is taken from one paycheck, that can have adverse affects on the general monthly expenses.For this reason, it is important to carefully calculate the impact that this kind of loan will have. Getting fast loan approval certainly makes a difference when financial emergencies need to be handled, and it is the speed of access of essential funds that is the key advantage.Remember too that the small print in any unsecured loan contract can reveal added fees and charges, that may make the loan even more expensive. So be sure to read any deal in detail before signing up to it.