Let’s face it; bad credit can become a real pain. One of the main reasons it is a pain is that it creates a cycle that never ends. You can find yourself in bad credit for many reasons; perhaps it was because of an expected expense like an illness or death of a relative.
Whatever the reason may be, the fact remains that once your credit score declines, improving it becomes more difficult, and getting a loan seems impossible. However, contrary to this common belief, there are loans you can get on bad credit.
Though it is not impossible, it is slightly tricky. Your pool of options may not be as vast, and the terms would probably not be entirely in your favor, but they can still be extremely helpful when they are absolutely necessary. If you have been wondering what your available options for borrowing are, keep reading our guide to find out if you have bad credit.
1. Personal Loans from Private Online Lenders
For those looking for loans you can get on bad credit, your best and safest bet is private online lenders. This type of loan involves taking out a fixed amount of money and repay it over a predetermined course of time. These personal loans can be either unsecured or secured, the latter meaning that you will have to put up an asset as collateral. They can also have a fixed or variable interest, depending on the lender.
There are multiple advantages of seeking out this option, with the most prominent ones being the fact that they are flexible and seldom take your credit score into notice. Most online lenders, such as iWantCashLoans, are fast, safe, and simple. Their application process is straightforward, and you can receive cash from them in a short amount of time and use it for whatever you want.
2. Peer-to-Peer (P2P) Lenders
These are also an excellent source for financial aid when you have a low credit score. A lender or group of lenders can be private lenders or P2P lenders separate and, unlike financial institutions. This is because they are more flexible with their terms and will often neglect your credit score if they believe that you are capable of repaying the loan you borrow.
Moreover, similar to online lenders, you can use the cash for anything you want, such as debt consolidation, starting a business, paying your mortgage, and so on. However, a drawback of P2P lending is that you will likely have to pay very high-interest rates.
3. Home Equity Line of Credit
If you own a home and have equity in it, then borrowing from your home’s equity can be a suitable option since it does not take your credit score under consideration. Moreover, because you are putting up your home as collateral, the interest rate for this loan is likely to be low as well. However, this option is one of the more risky ones than the rest because you can lose your house if you cannot repay the loan.
You should explore this option only if you have a steady and reliable income source that you can use to repay the debt over time.
4. Payday Alternative Loans
When it comes to loans you can get on bad credit, it is recommended that you steer clear of payday loans. Though they may seem like an attractive option because they don’t require any credit checks, payday loans can actually land you in deeper trouble. This is because of the very high-interest rates they carry.
You can thus consider ‘payday alternative loans’ that are offered at certain credit unions. The terms of this loan are more flexible, and the interest charges are also lower than payday loans.
5. Secured Personal Loans
With a bad credit score, sometimes your safest bet is with secured personal loans. This involves borrowing money by putting up your assets like your house, property, boat, or car up as security. The lender will hold this asset of yours till you repay the full amount that you borrowed. However, if you fail to repay the loan, the asset permanently becomes theirs.
Even though there is significant risk involved, with this type of loan, you can get better terms and conditions, lower interest rates, and a chance to borrow larger amounts of cash.
What to Consider When Taking Out a Loan on Bad Credit
Now that you know about what loans you can get on bad credit, it is also essential to determine whether you need one in the first place or not. Taking out a loan, especially when you have bad credit, holds significant risk. This is why you must take the following things into careful consideration:
· Can You Afford the Loan?
Since you already have bad credit, the terms that lenders will offer you are also expensive. For example, they may charge you a high-interest rate making the overall loan more costly. Thus you should first determine whether your repayment fits in with your monthly budget and income before taking out the loan.
· There Will Be Limits to Your Borrowing Amount
Perhaps you are being offered a lesser loan amount than what you need; then, you will need to determine whether the loan is worth the risk at all.
· The Chances of Defaulting Can Cost You
Suppose down the line you find yourself struggling and ultimately unable to pay off the debt. In that case, you will find yourself in deep trouble, perhaps even legally. Hence you should figure out a realistic repayment plan before taking out a loan.
The Bottom Line
No loan is without risk, both to a lender and borrower. This is why you should carefully consider your options and financial situation before venturing upon the possible loans you can get on bad credit.
If you decide upon taking out a personal cash loan, we recommend considering online lenders such as iWantCashLoans. They offer the most flexible terms and help you get access to funds quickly. If you want to know more, you can visit their website or fill out an application for a loan here.