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Apr 07

How to get a personal loan with bad credit

Reading Time: 3 mins

Have you been struggling with bad credit for a while now, but you need a loan to consolidate some debts, or to make an emergency payment? Often, people with bad credit are led to believe there are no options for them, however, I’m here to tell you that that just isn’t true.

There are several solutions available to get a personal loan for people with bad credit:

Credit Unions – If you have a poor credit rating, a credit union may be in the position to offer you an unsecured loan, with the added benefit of a lower relative interest rate and relaxed lending guidelines. However, credit unions are know to take a considerable amount of time to transfer funds, and you will likely be required to apply in person.

Co-Signers – When you make an application to a lender for a personal loan, if you have bad credit they may ask you to provide a co-signer on the agreement. Essentially, when you include a second person on the loan application their credit rating is taken into consideration when approving or denying your request.

With that being said, co-signers must be made aware of the risk they are entering into before any agreement is signed; since the loan will appear on their credit report, and any failure to pay will affect them also.

Home Equity Loan – This is only possible if you are a homeowner, and that your current home or property has built up equity. If it has, then you might want to contemplate taking out a loan against your property.

Online Lenders – These days, it is most likely that you will make a loan application through an online vendor. Not only is it convenient, but it is a typically simple process to follow – with most lenders transferring funds within 24 hours.

A simple way of finding a suitable online lender is through an aggregate comparison service, such as that offered by Crediful.

Not only that, but there are a multitude of specialty loan providers that lend to users with bad credit.

 

How to Find a Personal Loan Provider Online for People with Bad Credit

Finding an online lender to meet your needs is relatively straightforward, with many reputable brands operating online providing quality service to their customers. However, care must be taken as there are some who are willing to take advantage of the desperate or uninformed.

Payday loans, for example, will approve almost anyone for a personal loan; however, the interest rates on loans from these companies are often several magnitudes larger than those of other lenders that specialize in poor credit loans. It is often more detrimental to source a payday loan than look at other options in the long run.

When looking online, the first thing you need to check is whether or not the lender you are looking at has registered to conduct business within your state, this information is easily found through the financial institution regulatory bureau. Secondly, a tell-tale sign of whether or not your online lender is operating safely is their website URL.

If the URL has the prefix ‘http’ then the website is open to compromise and your personal details are more at risk. Yet, if the URL has the prefix ‘https’ then the site is secure, and your details are safe.

Next, you should check previous user reviews on the lender, if there are none available or they are mostly negative – stay away. If reviews are mostly positive, make sure that all the information you need is easily available on the website, the more transparent the lender is with you the more trustworthy they are.

 

Bad Credit Loans – What Can I Expect?

There are several downsides to having poor credit, not only are you less likely to be approved for a loan; but when you are, you will face a higher APR than users with an improved credit score. It is often the case for people with bad credit that they will see APR of 20% and above.

It is also likely that the amount you can borrow is significantly diminished. If your credit is exceptionally bad it is possible you might be limited to a maximum loan of $1000 or even lower. If that is the case, you must make sure that a personal loan is the best option for you, and that you can afford the repayments.

Since bad credit loans tend to require some sort of collateral against the loan, you must be in a position that you can afford your repayments, else you risk losing your property, including your vehicle or home. On the flipside, if you take out a loan that is well within your means and you pay it off on time, or early – your credit rating will have been improved.

 

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