There is a lot of misinformation about getting loans if you have bad credit. Some People believe it’s impossible to receive a loan if your credit isn’t top notch or that it’s too difficult to repair your credit after you’ve filed for bankruptcy. Bad credit personal loans are available and there are options available to people who are going through or have went through financial hardships.
What is a bad Credit Personal Loan?
These are loans that are given by lenders who specialize in providing loans to people with bad credit. They generally have higher interest rates, and have strict terms for repayment. Bad credit loans are ideal for people who have a shaky credit history due to missed payments, defaulting on loans, filing for bankruptcy, etc.
Can anyone get a bad credit personal loan?
While bad credit loans are aimed at helping people with bad credit histories, that doesn’t necessarily mean that everyone is guaranteed to get one. Like all loans, you have to be approved. There are a number of factors that go into being approved for the loans. Bad credit personal loans do take your credit into consideration (although not as much as a standard loan would), the amount you’re asking for, and your current financial status. And your lender will also play a vital role in whether or not you get the loan. Approval will differ with each individual’s circumstance.
What types of bad credit personal loans are there?
There are several different types. The main ones are:
- Pay Day Loans: Loans that are to be paid back on the borrower’s pay day. These loans require the borrower to be employed, and to receive a paycheck.
- Secured Personal Loans: These are loans that are backed by some form of collateral. They typically will have the lowest interest rates of all bad credit personal loans since the borrower is offering collateral to guarantee repayment.
- Unsecured Personal Loans: Unlike secured personal loans, these require no collateral from the borrower and function just like standard personal loans. But due to the fact that the borrower has bad credit, they will be paying a higher interest rate. Lenders consider these types of loans the highest risk. If the borrower defaults on the loan, the only way the lender can recoup the loss is by seeking legal action which can be costly and time consuming.
- Stock Loans: Similar to secured loans, stock loans provide a form of collateral to borrowers. Borrowers provide the lender with shares of stock as collateral for the loan. The difference is that stock loans are non-recourse loans. This means if the borrower defaults on the loan and the value of the stock no longer covers the balance due, the lender cannot take any action to recoup the difference from the borrower.
I filed bankruptcy, can I still get approved?
Bad credit loans cater to people who have filed bankruptcy. This doesn’t mean that you will be automatically approved however. Remember that other factors are considered as well to be approved for these loans.
How can I get a bad credit loan?
There are lenders that specialize in bad credit loans online or in your city. Choosing online lenders will give you more to choose from which is a great benefit. Since you’ll want to shop around for the lowest rates, being able to search the web in your home makes this process a lot faster and easier.
Will bad credit personal loans help my credit?
As long as you’re making all your payments on time and completely pay off the loan on time, bad credit loans will absolutely help you improve your credit score. Since it will be very difficult for people to obtain regular loans, buy a car, or purchase a home, bad credit loans are a great way to help them to rebuild their credit.