How To Get A Bad Credit Loan
Financially strapped individuals with poor credit think that getting a loan is fruitless because they don’t know how to get a bad credit loan or believe they can actually get one. By exercising due diligence, you may be pleasantly surprised at how easy it is to get a bad credit loan.
- Get your credit score. Anything under 580 is considered poor. Even if you are approved for a loan, you will have a much higher interest rate than someone with a higher score. If your score is between 581 and 660, you may be able to get a regular loan if you have a good co-signer. If it is higher than 660, you shouldn’t be reading this article.
- Consider a secured loan. A secured loan can be a viable option, provided you have something to secure as collateral, like your house or a vehicle. Make sure that you will be able to make timely payments, or the bank will seize your collateral property should you default on the loan.
- Don’t rule out your local bank just yet. Check with your local bank and credit union to see what loan options are available to you. Exhaust all other options, including borrowing from family and friends, before browsing the Internet for a bad credit loan.
- Do your homework. Most likely, your bad credit loan will be issued by an Internet lender or a storefront lender. This type of bad credit loan is also known as a payday loan. There are many offshore lenders of bad credit loans that are not payday loans, mostly from the UK. It is strongly recommended that you do a Better Business Bureau inquiry on a bad credit lender prior to doing business with them. Once a company checks out and you feel comfortable with them, simply fill out their online application or submit your application via phone. Usually you get an answer within 24 hours. Some bad credit lenders may take longer.
- Read before you sign. Take the time to thoroughly read your loan documents prior to signing them. Most bad credit loan agreements have ACH and wage assignment clauses that you cannot afford to overlook.
- Payday loans should be a one-time last resort. A payday loan (also known as bad credit loan) is a short-term loan that is due by your next payday. These loans have exorbitant interest rates and “renewal fees” if you extend your due date. Borrowers end up paying back to to three times the principal amount. Check your state’s payday loan laws at Paydayloaninfo.org prior to getting this type of bad credit loan. Lenders are required to be licensed to lend in the state where they reside. Local storefront payday lenders usually abide by the law. Most Internet lenders, however, operate unlicensed and lend to anyone who applies. When you default on a bad credit or payday loan, these lenders will go to any length to collect: tacking on inflated “collection fees” before sending to a collection agency, threatening legal action, contacting family or friends, or even attempting to garnish your wages. If this type of bad credit loan is your only option, make sure you can pay it back in full by your next payday if at all possible.