Large loans are not easy for bad credit borrowers to secure. $50,000 is a lot of money and lenders are not willing to part with it unless they have assurances. Thanks to the recession, they have even tightened up loan criteria, so what chance is there of getting a $50,000 unsecured personal loan with bad credit?
The surprising answer is that there is a very good chance. True, the criteria is stringent, and other factors ensure the deal is not cheap, but as long as the necessary boxes are ticked, large loan approval is always possible.
The question is not really whether someone can get an application for an unsecured personal loan approved, but rather where they might apply for one and if their application is going to be strong enough. But, there are always ways to ensure these issues are adequately addressed.
Improve Your Chances of Approval
There are a number of moves applicants can make before submitting their application that improve greatly their chances of securing approval. There is no doubt that getting a $50,000 unsecured personal loan with bad credit requires some careful strategizing, so it is worth making the effort.
The first is to build up their credit rating, a move that will see the interest rate lowered and the debt-to-income ratio improved. This can be done by clearing some (if not all) of the existing debt, with each loan repaid causing the credit score to be adjusted upwards. When this is done, large loan approval is much more likely.
The speediest way to accomplish this is to combine all of the individual debts and repay them in full with a consolidation loan. This replaces multiple loan balances and interest rates with a single loan and accompanying interest rate. And, with a long loan term, the monthly repayment can be significantly lower than the previous combined repayments total. This frees up extra cash, which can be committed to repaying the large unsecured personal loan.
Avoid The High-Earner Requirement
A second move that can greatly improve the chances of approval on a $50,000 unsecured personal loan with bad credit is to add a cosigner to the application. Normally, one of the criteria for a large loan is that the borrower has a large income to cover the repayments, but not everyone earns $100,000 per annum.
A cosigner guarantees the monthly repayments will be paid without fail, effectively providing a level of security that even collateral is unable to match. With this assurance, the interest rate drops and the chances of securing large loan approval are greatly enhanced.
Of course, your cosigner must meet the necessary standards to be accepted. They must have an excellent credit rating and have sufficient income to cover the repayments if the borrower is unable to make them. But when they fit the bill, approval on a large unsecured personal loan is practically a formality.
Consider Alternative Lenders
The choice of lender can be a defining factor when applying for a $50,000 unsecured personal loan with bad credit. Lending such a large sum of money is a big risk, and as a result, traditional lenders are reluctant to grant approval, even if all the boxes are ticked.
Alternative lenders are more open to taking on these risks, with online lenders and subprime lenders more likely to grant large loan approval. This is because they are both recognized experts in lending to bad credit borrowers, with loans structured to suit that niche market.
There are compromises to accept though, what with interest rates higher (especially with subprime lenders), but because the loan term is longer, the monthly repayments are still affordable. And when $50,000 is badly needed, accepting such conditions on an unsecured personal loan is worth the cost in the long run.