Advantages:
1. An ideal financial solution when you could not get it from traditional banks because of your low credit score - If you are experiences serious debt problems and you have no other solutions to pay them off, having such financial solution could stave off most of your outstanding debts and it is also a perfect way to avoid bankruptcy.
2. It will help you to build credit on the long-term period - If you are using your no-credit personal loan to pay off your debt all at once, your creditor will clear all your outstanding balances, and your credit score will be increase within certain period of time.
3. You can negotiate with the non-bank lender for an affordable loan rate if you have a co-signer to back your application - The non-bank lender would normally offer lower loan rates if you have a suitable co-signer (also known as guarantor), who has a high credit score and has valuable assets to put up as collateral.
Disadvantages:
1. The borrower has to bear the high loan cost if the borrower does not have any assets to back his or her loan application - In realistic, non-lenders usually grant lower loan amount with high interest rate applied, as their preventive measure - in case that their bad credit applicants are unable to repay their loans as agreed.
2. The co-signer has to bear the consequences if the borrower is unable to perform his or her loan duties - The lender has the right to use the guarantor's assets to repay the borrower's loan - if the borrower has neglect his or her loan duties. In addition, this could also affect relationship between the borrower and the guarantor personally. Therefore, a co-signer has to make sure that the borrower has the willingness to repay his or her loan on the long-term basis - for instance, by persistently reminding the borrower to allocate funds specifically for his or her repayments.
No comments:
Post a Comment