If you’re in the market for a bad credit personal loan, you may have noticed that many lenders will offer to loan you money only if the loan is secured. What this means is that you need to put up collateral–something of value, like you home equity, or stocks you hold–that the lender can sell if you should default on the loan.
Given that you are a poor credit risk, this policy makes a great deal of sense from the lenders’ point of view. But you may find a bad credit personal loan available even if you lack the collateral to secure it. This sort of loan usually requires that you have someone cosign the loan with you, agreeing to be responsible for the payments if you fail to make them. The cosigner, naturally, will have to be someone with a good credit record.
Bank and Payday Loans
One thing you should know about the financial industry is that there is never a lack of people with money available to loan it to people without it. And many of those lenders will be helpful in determining the kind of bad credit person lion for which you are best qualified if may be a bad credit consolidation loan which will let you pay off your pre-existing debts.
There are also lenders who will loan you money as an advance against your next paycheck; the amount these lenders are willing to put up is usually limited to between five and fifteen hundred dollars. A loan of this type usually does not require a credit check, so can’t really be termed a bad credit loans. easy approval installment loans for bad credit direct lenders But it is often the only recourse for those whose bad credit has left them unqualified for other options.
With the payday loan, you will be expected to pay back the money on your payday, or suffer a serious hike in the already hefty interest rates.
Studying Your Options
Both the amount of money you need to borrow and the reasons you need to borrow it will to a large extent determine the sort of bad credit personal loan you should consider. You need to take the time to thoroughly research appropriate type of loan, and the company which will lend you the money at the best possible terms.
While one company may offer you the lowest interest rates, they might also limit the amount of money they are willing to loan you, or have shorter payback time with much higher monthly installments than another company. So you will have to balance what you can reasonably do in terms of paying back a loan with what is being offered. You can immediately eliminate offers for secured loans if you have no collateral.