Why Bank Personal Unsecured Loans Are Hard To Qualify For?
You may have wondered why unsecured loans that are granted by banks and traditional lending institutions have so many credit requirements and why they are so hard to qualify for. Truth is that this has not a simple explanation but we can try a fairly accurate clarification of this fact by analyzing how risk affects these loans. Risk And Unsecured Loans The lack of security turns unsecured loans into a high risk financial transaction for the lender. The guarantee for repayment is only the commitment of the applicant and eventually, a long and costly trial to recover the money. The process to legally claim a debt on secured loans is, as opposed to the above, shorter and less expensive in terms of legal fees and charges. Thus the main security for the lender is the borrowers behavior. Thats why they need a credit history. It is the only way to foresee what the chances of the applicant defaulting on the loan are. Also, the characteristics of the borrowers income will determine the probabil
