Most, if not all, unsecured personal loan applicants want to get the best deal possible, regardless of their credit score and history, personal employment situation, and debt-to-income ration, which is how much monthly debt an applicant has compared to their monthly income. And why not? Who wants to pay more for a loan that could cost less?
Currently, the lending market charges borrowers a premium in the form of higher rates for no credit or bad credit, short-term employment history, and a high debt-to-income ratio, and it’s not likely lending practices are going to change anytime soon.
Competitive lending companies, whether they use a traditional or online business model will compete for borrower’s business by offering lower rates and longer-terms, which can drive interest rates down in the market.
Personal Loans with Bad Credit
Unfortunately, not everyone will qualify for the most favorable loan the first time they apply. If a higher rate loan allows an applicant to consolidate their debt and close delinquent accounts, it may be beneficial for the applicant to begin repairing their credit with an unsecured loan.
Depending on market conditions and future rates, the applicant could get a lower interest rate the next time they apply for a personal loan.