Ironically, people in need of credit and loans are the ones having the hardest time acquiring loans. If you have a bad or marginal credit score, getting a loan may seem almost impossible – regardless of whether it’s for sudden medical bills, emergency car repairs, a home purchase or repair.
If you’ve found yourself ineligible for most traditional loans in the past, you need to rethink your strategy. Probably, the following loans for people with bad credit would suit you more.
Personal Loans for People with Bad Credit
A bad credit personal loan is a kind of loan meant for individuals with no credit or bad credit histories. Even if your credit score is bad, you would find institutions willing to lend you out money, though your interest rates would be much higher due to the higher risk attached to your profile. Bad credit personal loan is an umbrella term and encompasses a variety of loans.
- Unsecured loans: These personal loans are for individuals with poor credit and are among the riskiest for lending companies. However, before opting for one, conduct some research into the firm you’d like to borrow from. Some of these loans could be scams.
- Secured loans: Secured loans are a possibility as well, except these have a “collateral” clause. Such loans are much easier to locate since they offer lenders the legal option to confiscate property if the loan payments don’t come through on time. These loans are usually associated with home refinancing or mortgages. Also, bad credit loans are available for credit card companies and automobiles.
Cash Advance Loans
Cash advance loans are loan types designed to offer borrowers quick access to money that usually isn’t available until a specific later date. Generally, these cash loans are doled out with the logic that borrowers would repay the money upon acquiring funds they’re slated to obtain, like paycheck money or funds via social security disbursement.
Unlike other loan types, cash advance loans are to be repaid within a short time period instead of months or years post receipt of funds. Since the loan sum is usually due upon receipt of the next paycheck, some loans could be due within a few weeks post funding. For instance, if you get paid every two weeks at work, your cash advance loan will be technically due within a couple of weeks of disbursement or the day when your paycheck arrives.
Sub-Prime Car Financing
Acquiring a car loan with bad credit is not impossible, provided you are willing to put in some extra effort. A few initiatives from your side could dramatically enhance the quality of the loan available to you. The two aspects that need to be carried out is a proper budget plan and steering clear of dealer financing, since those are often available at a higher price.
People keen on such car loans bad credit must concentrate on ensuring their credit doesn’t degrade any further, by making prompt bill and other payments. Paying substantial balances off or decreasing credit card balances could dramatically spike up your credit score, leading to future loan options with much better terms.
A pawn shop loan is another bad credit loan that offers money to borrowers with something valuable serving as collateral. In contrast to regular bank loans, pawn shop loan lenders don’t conduct credit investigation into your finances. Rather, the amount you’re eligible to loan in depends on your collateral’s value. You lose the collateral if you don’t pay the loan amount and interest sum on time.
Common collateral examples include sporting goods, guns, electronics, and jewelry, but the item could be anything valuable. The amount borrowed will be based on item worth, condition and what the pawn shop owner believes the item could sell for. Upon receiving the collateral, the pawn shop provides you the money and a ticket. The pawn ticket bears the collateral item description, your loan number and loan expiration date.
Vehicle Title Loans
A title loan, also called a car or car title loan, is a type of loan that needs your car as collateral. It is usually considered a poor credit loan as there’s no credit check carried out by the lender. A title loan’s interest rates could be higher compared to traditional loan options. If you fail to pay the loan back, the lender will make up for the losses by legally claiming your car and selling it to recover the loan sum. Getting this loan is a simple process, with online applications available as well.