Explanation of Bad Credit Unsecured Loans The bad credit unsecured loans are the ones where the borrowers are not required to provide a particular asset of theirs as a security. The bad credit unsecured loans are mostly used by borrowers with poor credit records. These loans are normally regarded as a viable option for the borrowers with bad credit history. Borrowers of Bad Credit Unsecured LoansThe people who live in rented homes are amongst the biggest client groups of the bad credit unsecured loans, as they normally do not have a residential property to pledge against the loan amount. It has been observed that the homeowners who do not want to risk their homes go for the bad credit unsecured loans. Rates of Interest of Bad Credit Unsecured Loans The rates of interest of the bad credit unsecured loans are normally on the higher side. There are two basic reasons for this. The first reason is that no collateral is provided against the loan amount and the rate of interest is increased in order to cover for the absence of a security.
The second reason for the high rate of interest of the bad credit unsecured loans is the fact that the borrowers have bad credit records. In order to cover the credit risk associated with lending money to such customers the rate of interest is strung high.
The rates of interest offered to a borrower with bad credit are dependent on a number of issues related to the borrower like:
Economical situation of the borrower
The amount of money being borrowed
Credit Score of the borrower
Amount of earning of the borrower
Last Updated on : 9th July 2013