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Bad Credit Personal Loans

 

Some important and fundamental facts about bad credit personal loans

There was a time when people with bad credit had to face a number of difficulties to get a personal loan. However, presently many financial institutions offer bad credit personal loans to cope with the tough economic scenario. In fact, these lenders specifically target borrowers with bad credit. Assuming potential financial risks of lending money to customers with poor credit, these financial institutions often charge higher interest-rates to make profits. On the other hand, borrowers with poor credit rating usually lack other options in public banks while looking for personal loans, unless their credit gets improved.

Fundamentals of bad credit personal loans

A bad credit personal loan is a new type of personal loan offered by the lenders that believe that less-than-perfect credit doesn’t indicate a borrower’s inability or unwillingness to pay back a loan. The term of the loan and the repayment options depend on the purpose of seeking the loan. Here are the basics of personal loans with bad credit.

  • Significance – A credit score below 620 is considered as bad credit or poor credit by the financial institutions. Money lenders get the credit score of a person from any of the credit reporting agencies like TransUnion, Equifax and Experian. Most bad credit personal loans are offered online or through local lenders as payday advances or payday loans. Payday loans are considered as personal loans as they are renewable as long as the borrower can pay the loan in full with pre-set interest. However, additional fees are charged for every renewal.

  • Eligibility criteria – People with bad credit need to meet certain eligibility criteria in order to get the loan. A borrower must be 18 years or more and a legal resident of the country with a monthly income of 800 USD to get a bad credit personal loan. Moreover, the borrower should not have any outstanding payday loan or any active checking bank account in order to get a bad credit personal loan.

  • Loan amount – Financial institutions are not likely to lend more than 1,500 USD to a borrower with bad credit as an unsecured personal loan. Loans up to 500 USD don’t require any credit check. The entire process of loan approval and funding usually takes 24 hours to 48 hours.

  • Drawbacks Bad credit personal loans come with a number of fees including loan-origination fees. In addition, the lenders charge higher interest rates than conventional interest rates. If the borrower fails to pay back the loan on due date, the lenders may allow delay payments, but with an extension fee. Some financial institutions charge pre-payment penalties. Loan insurance is also sometimes offered against additional fees. Considering the drawbacks, it is recommended that a borrower with bad credit must fully understand the points of exclusions and the costs before borrowing a personal loan.

  • Cautions – People with bad credit often fall into the trap of fake lenders or false debt counselors, while looking for a personal loan. Before taking out bad credit personal loans, a borrower must be aware of the loan scams. He must not share his personal information including Social Security number or bank information with any Tom, Dick, and Harry.

How to get a bad credit personal loan

If you’re in dire need of cash and looking for a bad credit personal loan, you can follow these steps towards taking out a personal loan with bad credit.

  • Find a reliable lender – This is the first step to borrowing bad credit personal loans. You may ask your regular bank. If it doesn’t offer such loans, you should look for online resources. There are many online money lenders that have become trustworthy in the field of personal finance. Choose one that offers you maximum flexibilities.

  • Identify the purpose of loan – Now you need to identify the actual purpose of seeking the loan. If you want to get it for the purpose of buying a car or a home, it’ll be better that you improve your credit first. Better credit would help you find some better loan options with more flexibilities and lower interest rates. However, should you need it for other purposes like wedding, home improvement or vacation, make sure you pay back the loan in time to avoid paying hundreds of dollars in interest.

  • Compare terms – You must compare the terms of the loans offered by different lenders. Apart from the interest rates and repayment options, you should also check for terms like hidden costs, closing costs and other potential loopholes before borrowing a loan.

  • Meet the lender in person – If you’re applying for bad credit personal loans through a bank, make sure you meet the bank representatives in person. However, if you’re applying online, you must complete the full application form. Ask the lender about what documents they need for loan approval and funding. Normally the lenders ask for documents that prove that you have an asset to use as collateral and steady income to pay back your loan in time. Provide all essential and supporting documents to your lender to give a good impression and establish reliability.

  • Review documents – Make sure you review all the loan documents to check that the terms of the loan contained therein are same as the terms agreed upon by you. Sign off on your loan only when you think everything looks as they should.

Bad credit personal loans are good as long as you’re in dire need of instant money. Make sure you pay it back once the crisis period is over. Avoid skipping your monthly payments. Rather pay it back earlier, if your lender doesn’t charge any penalty for early repayments. Try to improve your credit so that you don’t need to depend on such loans with higher interest rates. Even if you need to take out a personal loan, check all the fees and costs associated with it to avoid any unwanted situation in the future.

EasyFinance.com offers a great variety of bad credit personal loans with the most competitive interest rates.  We provide a fast, easy and secure transaction to help guide you through the process.

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