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5 Feasible Loan Options for People with Bad Credit

According to credit bureaus, approximately one-third people have bad credit. Getting a loan with a bad credit is difficult, because lenders don't prefer dealing with someone who has had a burden of delayed debt payments. As such, the loan application is either denied or else it is approved but the terms are stringent, and the borrower is required to pay a higher interest or repay the loan within a shorter time-period. While conventional loans may be out of reach for some, there are plenty of other loan options for people with bad credit. Here we shall discuss a few:

Bad Credit Loans
As the name suggests, a bad credit loan works best for people with poor credit. While it is fairly easy to get qualified for this kind of loans, be mindful not to get carried away in the vicious cycle of debt. And since bad credit loans have sky-high interest rates, you have to be extra careful before opting for it. Also, there is a limit to the amount you can take a loan.

Credit Union Loan
Credit union loans are comparatively less demanding than banks; as such, anybody is able to apply. The membership eligibility is usually as easy as living in a certain location or having a particular profession. Since credit unions are non-profit bodies, they tend to offer financial services at a lower interest than banks, and their quality of customer service is considerably higher than that offered by banks. To top it all, unsecured loans are available as well, for people with poor credit history. But keep in mind that the amount you borrow will be limited by your credit score and the type of loan you're applying for. Another drawback is that unsecured loans have shorter periods for repayment.

Secured Loan
Secured loan is a loan in which you offer a valuable item of your own as collateral. Obviously, this requires you to have valuable assets such as home or car at your disposal. With secured loans, repayment period is relatively longer and lower interest rates are possible too, provided the asset is of high value. And sometimes, it is the only way out for people with bad credit. However, the only downside is that there is a danger of getting stuck in debt due to the long-term period.

Co-signed Loans
If a relative with good credit agrees to act as a co-signer for you, then you can get a loan for a lucrative interest rate and term. The main challenge is to convince someone to be your co-signer because if you fail to pay off your debt, your co-signer will be held responsible, and the lack of timely payments will have an adverse impact on the credit scores of both you and your co-signer.

Peer-to-Peer Lending

A comparatively new form of a loan, peer-to-peer basically refers to an online forum where you get the chance to borrow directly from a willing lender rather than submitting your appeal to an institution. Potential borrowers post loan listings on these websites, denoting the exact amount they need and why they need it. Following that, investors assess the loan listings, short-listing the ones they want to fund. The process is quick, legit and free of hassles.

Ending Note...

Weighing all the loan options for people with bad credit, it would be safe to say that online lenders are the most feasible way out. They simplify the process of taking loans and demand comparatively lower potential fees upfront. Additionally, they are quick and often the only resort in the event of an emergency. To top it all, you're allowed to borrow a large amount than you would with a bank loan.
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