We usually have some misconceptions that only people with good credit and high income are eligible to apply for unsecured loans, but this is not the case. Some unsecured loans can be applied even if your credit is very low, as long as you can bear the corresponding risks and some high interest rate treaties. If your funds are facing serious liquidity risks, And we are considering how to apply for unsecured loans, so you must look at the advantages and disadvantages I will describe before making a decision. Otherwise, you have solved the current crisis, but faced greater risks, which is also the consequence we do not want to see.
More than three times the normal loan interest rate
Unsecured loans are characterized by a short period of time, often within a month, and high interest rates. This is because first of all, the shorter the period of time, the less risk the borrower will take, because as time goes on, many lenders will disappear, so it becomes very difficult to collect debt. Since it is an unsecured loan, the high risk means high income, Of course, the risks and benefits I mentioned are only for the borrower. For the lender, it means that the interest rate is very high. Only with high interest rate can we make up for the high risk of the borrower, and the interest rate is usually three times that of the ordinary loan, so you need to carefully consider whether you can pay these interests.
Excessively high liquidated damages
As we described in the previous paragraph, the interest rate of unsecured loans is extremely high, and the repayment period is very short. If you do not calculate your capital turnover problem, or there are other major changes in the middle of the way that cause you to be unable to repay this amount on time, it is very dangerous for you, because you will be punished, for example, if you default on the loan for more than one month, Then the borrower will take some measures, such as charging half or all of the amount you borrowed as liquidated damages, and more seriously, charging much more than your own principal. So before borrowing, please make assumptions about various situations, and think about several solutions, and think about whether you can find other ways to remedy after the interruption of the capital chain. If you can't find the second or third way, Please be careful to choose unsecured loans. After all, you can't afford the interest rate in the later period. Then your life may fall into the next huge trap.
Expenses that cannot be saved later
If you are really unable to repay on time, it is recommended that you go to your borrower and have a good talk at this time, and show your attitude to him that you can postpone the repayment, and promise to postpone the repayment of some additional costs, rather than directly evade, or simply disappear, because the nature of default and delay is different. If you only postpone, then if you can repay the loan within the extension time, Then you can get through this crisis very smoothly, but if you default, it will have a huge impact on your next life. For example, you may be on the blacklist, and you will never be able to make loans from now on. So I suggest that no matter what happens, you should let your borrower know the problem you are facing in time, and actively seek solutions instead of running away.
