In this article, we will be going over what the best loans for bad credit are and how you can apply. Bad credit usually signals the dark moment when creditors slam the doors shut right in front of your face. It ushers in a gloom and agony period when you miss out on investment opportunities because mainstream lenders shun you. The punitive nature of bad credit does not stop there. If you can clinch a loan agreement, the interest rates are high and punitive.
Bad credit can also bar one from renting and the procurement of some utilities and services. It is not all lost, however. Every dark cloud has a silver lining, it seems. Even amidst the woes of bad credit, there is hope because there are still loans within reach. It must be stated upfront that these types belong to a class of their own; they materialize when ‘push comes to shove,’ and their terms have to be embraced for what they are, bad credit loans.
What Types of Loans Can You Get With Bad Credit?
Without necessarily going into the specific organizations that provide them, here is a brief analysis of broadly the type of loans available even when one has bad credit.
Personal loans
Various lenders are flexible and offer personal loans whose cutoff threshold bends beyond the mainstream minimum FICO score. However, most of these have a maximum amount of money you can borrow and tough conditions applicable. These lenders will mostly be local and will use other creditworthiness strategies that are not Credit Score based. They also take time to verify crucial factors such as your current home, family, employment, expenses.
Loan Aggregators
These entities take over properties from lenders and use them for trading in a secondary market beyond the stringent credit score measure placed from the start. Loan aggregators normally buy out existing loans, and when they deal with the general public, they may not necessarily demand good credit to facilitate a deal.
Secured Loans
A secured loan is when you put up collateral, such as your house or car, that can be used as payment if you can’t pay back your loan. The three types of secured loans that are most popular are mortgage loans, where they foreclose on the house if you can’t pay, vehicle loans, where they repossess your car, and secured credit cards, where they take your deposit. So if you have a house, car or anything of high value you can get a secured loan if you have bad credit.
Related: How To Pay Off Your Mortgage Early
What is the easiest loan to get approved for?
Secured loans are one of the easiest loans to get approved. Lenders are more apt to loan you something when you give them something in return such as real estate or a vehicle that they can make some money with if you fail to pay back the loan.
Peer to Peer Lenders
These are the easiest loans because they don’t tie you to a specific purpose. They are fast to access and do not require the much sought-after credit score. In such a setting, the interest rate is fixed by the lender and accepted as it is, sometimes it can be cripplingly as high as 36%.
Bad Credit Loans
Bad Credit Loans is not a lender but they are a third-party service that can find you the best lenders for your needs within their large network. It is completely free for you to use. Simply fill out your information and how much you need a loan for. You can request up to $10,000 and is a great option for those who have bad credit as they have other requirements to use their service and apply for a loan.
Bad Credit Loans requirements:
- Be at least 18 years old.
- Provide proof of citizenship, such as a Social Security number, or legal residency.
- Have a regular income, either from full-time employment, self-employment, or disability, or Social Security benefits.
- Have a checking account in your name.
- Provide work and home telephone numbers.
- Provide a valid email address.
Credit Unions
Credit unions will offer loans depending on the profile you have with them. As a rule, they normally issue loans to members who have existing shares and current deposits. It is possible to access credit even without a good score based on your recent contributions or pledges. It is also possible to get credit if you get cosigners or guarantors to sign for you. The most difficult challenge in such loans is getting consigners because many people, even friends, will avoid a situation of bad credit.
Related: How To Get A Loan With Bad Credit
Payday loans
These are extremely predatory credit facilities that take advantage of desperation. These arrangements are dire and sometimes unpleasant. The interest rate is astronomic, sometimes higher than 300%, and the loan issued is tied to one’s paycheck. The repayment is immediately attached to the next salary.
Subprime loans
These loans are notorious for long-term repayment terms and punitive interests. They are used mostly in the auto sector.
Family and friends
As a last option, it is always proper to seek help from close relations. It is always agreed that such close ties must be protected from personal ills. This choice means that should you win the trust to borrow from a friend or family, failure to repay will adversely affect the relationship of that close.
Related: Best Credit Cards For Bad Credit
Can you get a personal loan with a credit score of 550?
Yes, you can get a personal loan with a credit score of 550. Any credit score under 670 is considered a bad or poor credit score. While it might be more difficult to get a loan with a bad credit score, it is still possible. One fast and easy way to get a loan is to have a co-signer that has a good or excellent credit score or check with a local credit union.
Related: Best Loan Companies For Bad Credit
What is the average loan rate for a loan with bad credit?
When you have a credit score below 600, you can see your interest rate start to increase to 20% and above when you have bad credit. Lenders see you as more of a risk so they will have higher interest rates unlike someone who has an excellent credit score of 740 and above.
How can I get a loan with no credit check?
You can get a loan with no credit check a few different ways. You can apply for a secured loan, you can apply for a secured credit card, or you can apply for some personal loans that don’t check your credit. While you can apply for any of these options without a credit check, you should have other means so that lenders will loan to you with ease. For instance, you should have a steady and reliable income, if you have any side income coming in, and if you have collateral such as a home or car.
Related: What Is The Average Credit Score For Car Loans
While you can get loans when you have bad credit, you’ll get better interest terms, higher credit lines, and have an easier process if you have a good credit score. Increasing your credit score is easier to do than you think these days and we can show you now.
Other : Improving your credit score is a challenging task.
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