Loans For People With Bad Credit
Fundamentals of loans for people with bad credit
Do you often run out of money? You’re not alone; there are millions of Americans who undergo such a situation. Rising rate of inflation, escalating rate of unemployment and top of all, downward economic scenario are the main reasons behind this situation. Whatever be the reason, don’t stress yourself while you’re in urgent need of money, even if your credit is unhealthy. It is true that you may be turned down by the conventional lenders like credit unions or banks due to your credit status, but there are several lenders that specialize in loans for people with bad credit. These lenders have entered into the loan industry to rescue people with bad credit and provide them a reason for smile. You don’t need to feel stressed or deserted for poor credit, as these lenders are always ready to help you cope with the unwanted and sudden cash crunches. Bad credit loans are very handy for people who often struggle with their credit, as loan options for the individuals with poor credit are fewer than people with good credit history.
Things to know
Bad credit loans are high risk loans. Before you apply for a bad credit loan, you must have a comprehensive idea about this. For example, lenders, who offer loans for people with bad credit, often require the loan applicants to make a down payment or have an asset which can be used as collateral. They do so to lessen the risk of lending money to the high-risk borrowers. Here are some important points that you must know prior to borrowing a bad credit loan.
Steady income – When a bad credit loan is concerned, the lender always wants the borrower to have a stable employment with the same company for at least 6 months before he submits the loan application. The lender may ask the borrower to provide the contact number of his employer to confirm his employment. Your chance of getting a loan will be reduced subsequently, if you fail to prove your employment and your income as well.
Income proof - The lender asks the applicant to furnish last 2 months’ paystubs or income tax return (in case of self-employed people) to verify and make sure that the applicant has a secure source of income. Therefore, if you’re unable to furnish these documents, it would be difficult for you to get a loan even from a private lender.
Down payment – People with bad credit may qualify for getting home loans for bad credit, provided they must pay at least 20% of the buying price as down payment. Failing to this, the borrower is likely to be turned down by the lender. Besides the down payment, the lenders also require the borrowers to use their house as collateral. Down payment is also required in case of an auto loan. Irrespective of credit status, every borrower has to pay certain amount as down payment for getting an auto loan.
Collateral – Some lenders offer secured loans for people with bad credit. These loans are secured by collateral like home equity, stocks or bank savings accounts. These loans are widely accepted by people, who don’t want to pay more than 30% in interests, in spite of having unhealthy credit.
Higher interest rates – People with bad credit can get a loan without collateral or down payment. However, in this case, they need to pay very high interest rates (as much as 391%) along with additional fees. Such unsecured loans are short-term and small loans; for example, payday loans.
Steps to getting a bad credit loan
Whether from a traditional lender or a non-traditional lender, getting a loan is not a tough job for the people with good credit rating. When it comes to people with poor credit, getting a loan is really tough. Most traditional lenders like credit unions or banks usually don’t offer loans to bad credit holders. However, considering present economic scenario of America, nowadays many private lenders have started offering loans to people with bad credit against high interest rates. So if the bank or credit union has already declined you for unhealthy credit, you can surely opt for loans for people with bad credit to cope with your financial stress. Here are the steps that can help you take out a bad credit loan, conveniently.
Choose a lender – Choose a lender to deal with. You can use Internet to find legitimate online lenders of bad credit loans. Shortlist some of them and visit their websites. Go through the websites thoroughly to get an overview on their business. Remember, you should always work with a company, which is accredited by Better Business Bureau (BBB).
Compare the terms – While navigating through the websites, check the loan terms and interest rates offered by the lending companies. Now you choose one that offers favorable loan terms as well as reasonable interest rates. You should also check if there is any loophole in the loan terms.
Contact in person – It is always better to contact your chosen lender in person, if the company has a physical office in your locality. Otherwise, you can contact the company over phone, online chat or email. In case of online lender, fax the required documents when you’re asked for. It would ease up and accelerate the loan approval procedure.
Review the agreement – Once your loan application is approved, you will be asked to sign the loan agreement. You should read the offered documents carefully before signing.
Loans for people with bad credit are good until you’re confident about timely repayment. Failing to repaying the loan in time may cost you a fortune.
We specialize in loans for people with bad credit. We approve your loan application even before you fax us your documents.