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If you have tried for both secure and unsecured loans and been turned down there are other options. You can secure loans with someone elses collateral, good credit and signature. These are called cosigned loans.
You should consider, however, if this inability for you to secure loans on your own might not mean its time to improve your credit standing rather than time to borrow more money. Might you not be financially in over your head if the bank thinks you are not going to be able to pay the loan back yourself?
Instead of a co signing you could, for example, ask if they could lend you a lesser amount on your own. In fact, unless you absolutely cannot put off borrowing the original amount consider making that purchase until you can do something to improve your credit or pay cash for the purchase.
The best thing to do, no matter what your final decision is to ask the lender what you should do to change its attitude towards letting you secure loans on your own. Once you know what that bank is looking for, follow that advice.
There are generally two reasons that a financial institution wont let you secure loans without a co-signer. The first reason is bad credit. The second reason is that you are borrowing for the first time and have no credit history.
Either way the reason is about your credit. In either case the lender may require that you find someone else to sign on the dotted line that if you dont pay the loan he or she will. This is your cosigner.
These co-signed, or guaranteed loans, while they secure loans for a would–be borrower, are risky ventures for the cosigners. While it may not be that the person needs that cosigner because she or he does not pay her bills, it probably is the case.
Before anyone agrees to cosign and thus secure any loans for any friend or family member they should consider the persons ability to make the payments on their own, the persons character, and whether they themselves could afford to pay the balance if the borrower did not. The other thing to consider is whether the cosigning is worth losing the friendship which so often happens in these cases.
The other thing to keep in mind is that if you cosign a loan for someone else it becomes a loan to you for purposes of your credit report. When you apply for any credit on your own it can affect you ability to secure your own loans, as your friends loan will alter your debt to income ratio.
What a lot of folks do not know is that if you have cosigned a loan that has been paid satisfactorily for an extended time period you can ask that creditor to take your name off the loan. Do ask that lender to report the removal of your name to the major credit bureaus.
This might be difficult to do, however, if the loan you cosigned is for a mortgage. Homes get refinanced and lenders may be more reluctant to remove your name. Its worth the effort, however, since that amount of money can really impact your ability to get a secured loan.
28 April 2007
