Options that Might Help You Qualify for Difficult Loans
Never in the last several decades have people with good financial habits found themselves in such economic uncertainty. But even without the pandemic, sometimes life creates situations where we are left in recovery mode. An illness, accident, or another unforeseen event might leave you without a job or even a place to live. Fortunately, with a bit of research, there is often a path back to recovery. Often part of the path is access to funds to help you get back on your feet. Even without collateral, there is credit available. Hard money loans usually have higher interest rates, but they might be just the thing to get you back on your feet.
- Deposit: Lenders don’t like risk. The less risk you represent, the more likely they will be to do business. Suppose you are willing to risk some of your own money in the form of a down payment. Usually this will increase your likelihood of finding some assistance. Try to arrange at least 10% of the money you need before you inquire.
- Repayment Strategy: One asset you can create yourself is credibility. Provide the lender, such as Universal Finance in Australia, with a detailed assessment of how you plan to repay the money and from what source. It will show that you have considered the situation and are already working to resolve it.
- Co-signer: If possible, arranging to have a friend or family member co-sign for your loan will vastly increase your odds of success. With a co-signer, most of the risk will now shift from the lender to the co-signer. It is usually sufficient security for a loan application to proceed. Your co-signer must be chosen carefully, though.
- Instalment Loan: An instalment loan is like a line of credit that you can use and pay over time, like a credit card, except that you are in possession of the funds from the beginning and must pay them back with regular minimum payments.
- Fix Your Credit: before applying for any loan, you want to make sure your credit is in as good of shape as possible. Your first step might be to consolidate your debts through a debt consolidation loan. This type of loan is easier to arrange because you are just moving your debt to a new location. But it will improve your credit.
There are usually some things that you can do to improve your borrowing profile. Accepting a higher interest rate is sometimes necessary to account for the risk. But doing what you can without borrowing more should always be your first step.