Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Written by Sara Routhier
Director of Outreach Sara Routhier

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: May 17, 2022

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High risk unsecured personal loans are loans that are high risk for the lender due to the fact that they are lent out to borrowers with bad credit and no collateral. If you have especially bad credit or have recently filed for bankruptcy, most of the available credit cards are secured by a small deposit. Unsecured loans of any type present a certain risk to the lender. So interest rates will be higher, but this may be a good option for some borrowers.

Perhaps the most notable feature of unsecured loans is that they do not require a guarantee. For many types of loans, collateral is required as security, which can come in the form of any asset, valuable possession, automobile, property, expensive jewelry, or expensive gadget. High risk unsecured personal loans are free of collateral requirements, hence the qualifier “unsecured.”

Due to this lack of collateral, lenders have no assurance that they will get their money back in the event a borrower defaults.

How Much Do High Risk Unsecured Loans Cost Borrowers?

To help balance their risk, lenders of high risk unsecured personal loans often charge high interest rates. Some of these rates have been reported to be at 100 percent APR. So any time you use them, expect to pay a high amount in interest even if you pay it off with every monthly payment. If you let your balances sit for an extended period, you can get into a lot of financial trouble fast.

Surprisingly, unlike virtually every other type of loan, credit score is not an obstacle for borrowers when it comes to qualifying for high risk unsecured personal loans. However, borrowers’ credit may affect loan amounts. This unsecured form of financing is typically given in amounts of $350 to $7,000. The lower a borrower’s credit, the lower a lender will lend. With regular payments and responsible behavior, the balance allowance may increase, but the interest rate will likely remain the same.

That being said, should a borrower pay off a high risk loan, they will see their credit impacted in a positive manner. However, borrowers who do default will experience a damaging blow to their credit score. Lenders will also not hesitate to use collection agencies should a borrower default.

Like other personal loans, high risk unsecured personal lending does not typically require borrowers to state their reasons for borrowing, but lenders do reserve the right to question intent and monitor purchases if they so choose.

The ongoing economic recession that began in 2007 has caused high risk unsecured personal lending to become much more common. Part of the cause of this trend is that the recession has left many people with little remaining valuable assets that could be used as collateral in other loans. Additionally, credit card usage rose during the recession due to lay-offs, bankruptcy and foreclosures leaving many people without steady sources of income.

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Where Can You Get High Risk Unsecured Loans?

If you have a low credit score, you may see some of these cards advertised on blogs and other sites. Many are offered by online lenders. Generally, organizations like banks or a credit union will wait until your credit is more stable to offer financing.

You can submit loan applications and go through the entire process online. This includes submitting any supporting documentation and answering questions about your credit history. You can also make payments online or over the phone. Just make sure to make your payments on time. Unfortunately, not all these companies allow for automatic payments. So the responsibility is on you to schedule individual payments.

High risk unsecured personal loans can be applied for online and sometimes even approved and obtained in less than 24 hours. Before applying, prospective borrowers can enter in their information on trusted sites to get a quote.