Acquiring bad credit loans seems impossible for those who have been turned down by major banks and financial institutions. When all hope seems lost, however, there’s often another way out.
People with poor scores can still get loans from other sources, but these loans often come with caveats such as high-interest rates and short payment periods. To find loans for people with bad credit, here are some places you can start:
1. Personal Loans for Bad Credit
Personal loans for poor scores are a type of loan from a bank or any financial institution. These are meant for personal instead of business or commercial use. This can be used to fund personal expenses or to consolidate debts.
Personal loans for bad credit can be secured or unsecured. Secured loans require collateral while unsecured loans do not. Of these two, it’s easier for those with poor credit to get secured loans since credit scores are a huge factor in acquiring unsecured loans.
If you don’t have any asset to offer, try looking for credit unions or banks that will grant you an unsecured loan. The catch is that unsecured personal loans have much higher interest rates than secured loans. Personal loans are usually used by borrowers to consolidate existing credit debts. This is because personal loans often come with fixed monthly payments with interest rates that are lower than their credit card debts.
2. Peer to Peer Lending Companies
Another way to find loans for individuals with poor credit is to inquire in peer to peer lending companies. This type of business is purely online and connects individual lenders to borrowers.
A P2P loan is one of the easiest bad credit loans to get because your credit score is not too big of a factor in their decision on whether to grant you a loan or not. Some peer to peer lending companies offer loans with under a 10% interest rate, making it attractive to people looking to get out of debt.
3. Payday Loans
Perhaps the fastest cash you can get without any assets required is through using payday loans. Basically, you apply for a loan which you will pay back in a lump sum on your next payday.
The current going interest rate is a little less than one-fourth the total amount. Although, this will quickly add up if you continue to roll out your payment to the next payday. If you move your payment three times, the interest will triple. So this loan is for those who are confident that they can fully pay off the loan the next month.
A Few Reminders:
*Perform thorough research on these types of bad credit loans. Know the catch in each loan type, so you’ll know what you’re getting into.
*Compare rates to make sure that you’ll get the lowest possible interest rate.
*Consult trusted with families or friends whether they think your plan will work and if they have better ideas on how you can handle your situation.
It’s not impossible to find loans for individuals with poor credit. Some lenders will be more empathetic to borrowers with low credit scores. The key is to do thorough research.