Getting a Short-Term Personal Loan with Bad Credit
Naturally, lenders prefer giving out loans to good credit borrowers, but they also offer credit options to borrowers with bad credit. Some lenders specialize in bad credit loan products.
Direct payday lenders will not turn you away just because your credit score does not look good. Their focus will be whether you can afford to pay the loan or not. The good news is, if you have a reliable job and salary, you can still be eligible for a short-term loan. You can get a short-term loan payable in a few months or a few years
Bad credit personal loans
A personal loan for bad credit is a type of borrowing made available to individuals with credit scores below 580. Banks and mainstream lenders usually reject loan applications from borrowers with low credit scores.
Fortunately, online lenders will normally look at the borrower’s source of income if he or she has poor or bad credit. The credit score is not an important factor for bad credit loan providers but this does not mean that they will not take a peek into your financial history.
Personal loan types for borrowers with bad credit
Bad credit personal loans come in different forms, such as:
· Payday Loan: A payday loan is a type of credit that must be settled on the following payday of the borrower. Although there is no need for collateral when obtaining a payday loan, it is usually associated with expensive APRs.
· Installment Loan: An installment loan allows you to get a bigger loan amount and pay it in equal monthly installments. The repayments are spread over the number of months indicated in the loan term.
· Auto Title Loan: You need your car title to apply for and granted an auto title loan. This loan normally comes with high-interest rates and your vehicle may be seized by the lender if you don’t pay on time.
· Cash Advance: A credit card cash advance is also considered a type of personal loan. Most credit cards have cash advance features and you simply need to go to the ATM to get the funds that you need. The interest rate applied to credit card purchases is different from the rate applied to your cash advance. If you abuse this credit card feature, you may end up accumulating debt that is too difficult to manage.
· Credit Builder Loan: This loan aims to rebuild the borrower’s credit rating and usually offered by credit unions and banks. It has low-interest rates and the loan amount can be $100 and up.
Applying for a bad credit personal loan
There are different kinds of online lenders but they usually ask for the same information from their borrowers. They will also process your loan request similarly. After completing the loan application form and submitting your loan request, it will be reviewed by the online lender before deciding to reject or approve your application.
Normally, lenders will ask for the borrower’s name, the borrower’s date of birth, employment information, social security and tax return details, and financial statements. Upon approval of your loan, you are to sign a contract that specifies the terms and conditions of your borrowing before the funds are transferred to your bank account.
Before applying for a bad credit personal loan, make sure to check the requirements and qualifications:
· The borrower must be of legal age
· The borrower is a resident of the country where he or she is obtaining the loan
· The borrower must have an active checking or current account
· The borrower should have a verifiable source of income
Bad credit personal loan benefits
· No collateral required
Some people have difficulty getting a loan because the lender requires the borrower to guarantee the borrowing using collateral. Unfortunately, some people do not own any property that can be used as collateral or are afraid to lose their assets. Bad credit personal loans are unsecured loans and may be obtained without any collateral.
· Quick loan approval
Online lenders work fast so you can be guaranteed of a quick or instant decision. There is no need to wait for days to get the results of your loan application. Bad credit personal loan lenders will notify you immediately whether you are approved or denied, usually within the same day. After approving your loan application, you will receive an offer from the lender within the day or the following business day.
· Funds may be utilized for any purpose
You can use the loan for any purpose you deem necessary, as long as it does not involve any illegal activities. You can use the proceeds of the loan for just about anything. The money can also be used to pay a bill or to consolidate your other debts.
Managing your short-term loan
Once you are granted a bad credit personal loan, you should manage it properly by ensuring on-time payments. Paying on time helps maintain or build your credit score. Payday loans must be settled by the next payday to avoid late fees and penalties. By managing your finances properly, you will be able to settle your loan without missing any payments which are crucial for maintaining a good credit rating and a great relationship with your lender.
Although personal loans can be used for everything and anything, you must avoid getting a personal loan just to buy something that you don’t need. Some people make the mistake of borrowing just to buy unnecessary items. Make sure that you use your loan proceeds wisely, and ensure that repayments are made on time.
If you are sure that you want to obtain a bad credit personal loan, shop around so that you can make a comparison of the interest rates and fees offered by different direct lenders. Choose a bad credit personal loan that suits your needs and capacity to pay. You can get the best loan deal if you take the time to compare the available options.
Why Choose Unsecured Loans?
Unsecured loans can help you out during the direst situations. If you need cash fast, unsecured loans like payday loans are the right choice for you. It’s fast, convenient, and highly reliable.
Unsecured loans other similar types can be extremely helpful during emergencies. However, most unsecured loans have high-interest rates compared to secured business loans. Loans with high-interest rates can be difficult to deal with. So choose the right deal that’s best for you.
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