Trying to figure out the easiest way to get a bad credit loan?
Wondering how to get a loan with bad credit?
If you have bad credit, it may seem like there’s no good solution for getting the funds you need through a loan. However, there are still a lot of options out there for getting a loan if your credit is less than ideal. You may just have to consider a few alternative options to make sure you’re giving yourself the best chance.
Below we’ll look at the best ways to increase your chances of getting a loan when you have bad credit.
1. Know What You’re Dealing With
One of the most important things to do when looking at where to get a loan with bad credit is to know exactly what you’re dealing with. It’s important to check your credit score and try your best to understand what your score means for you. Use a credit checker to check your score with FICO and the other credit bureaus and see what your score is.
The lower the score you have the harder it will be to get a loan. There are different levels of “bad” though, so you should know where your score lies on the scale. If you have a score that is just a little bit on the bad side, you may want to consider if waiting it out and trying to raise your score before getting a loan is the better option.
2. Make Your Choice Carefully
While there are different options for getting a loan with bad credit you should decide carefully which loans you should be applying for. Some lenders are less than trustworthy and may try to give you loans that have very high rates and can get you in a bigger financial hole than you were in before.
Payday loans can sometimes be a good choice but can also be bad for borrowers, for example. They have the potential to cause more harm than good. Consider the specific terms of any loan carefully before you apply for it.
While you should expect to pay a bit more interest because of your bad credit score, don’t let it get too out of hand.
3. Keep Your Search Short and Sweet
When you start your search for a loan that you can get with bad credit it’s important to remember that you shouldn’t drag the search out for too long. It’s better to apply for the different loans in a short frame of time rather than searching for a different one every month.
When you apply for a loan and leave too much time between each application, it may appear to credit bureaus that you are in constant need of a new loan. This may make it appear that you are unreliable rather than simply shopping around to find a good loan option for you.
4. Consider a “Bad Credit” Personal Loan
One of the common types of loans available to you, if you have bad credit, is a bad credit personal loan. Many lenders specialize in giving personal loans to people with bad credit and these loans are specifically intended for them.
These lenders are able to offer bad credit loans typically because, unlike other loans, the interest rates will be much higher. These types of loans can lead to problems if not used responsibly. However, they can be a good option if you’re looking for a loan and your credit is less than ideal.
5. Use Collateral For Secured Loans
Sometimes the best thing for you to do when you have bad credit is to take out a secured loan. With a secured loan you’ll be able to use an asset you have as collateral. This collateral can include home equity loans but other items can be used as well such as a car. You may even consider using your current savings as collateral with a cash-secured loan.
Having this collateral for your loan will allow you to appear much less risky to lenders despite your poor credit score. While you should be careful with this type of loan they can potentially be a big help and give you a better chance of getting the loan that you need.
6. Find a Co-Signer
If you’re desperate for money and need a loan, in some cases, you may simply want to turn to your family or friends for help. If you can convince someone to be your co-signer for a loan you’ll have a better chance of getting the funds you need – at least if your co-signer has good credit.
Keep in mind that your friend or family member will be liable for you so you’ll be putting them in a tricky situation should something go wrong. However, finding a co-signer may be the best option if you have a friend or family member who is happy to help.
7. Get a Loan Directly From Friends or Family
In addition to getting a family member or friend to be your co-signer, you may simply want to ask them for a loan outright. This kind of loan is actually more common than you may think, but can also lead to a lot of ill will and awkwardness, so it may not be your first choice.
The best way to get a loan from a family member or friend this is to treat it right from the beginning. Take the loan like you would from a regular lender. Create and sign a document which clearly describes the terms of the loan and makes sure everyone is well-protected.
8. Seek Help From Credit Unions
If you’re seeking a loan with bad credit, credit unions are often a good place to turn to. Credit unions are nonprofit organizations and often are willing to work more with someone with bad credit than a typical lender would. Rates are usually much lower as well.
While your credit score factors into the decision making process when getting a loan from a credit union, they are usually more willing to consider other parts of the bigger picture as well.
9. Take a Chance With a Pawn Shops
Pawn shops are another option for you if you have bad credit and need some cash. With a pawn shop, you’ll need to have an item of value which you can use as collateral.
Pawn shop loans will have a higher interest rate than many types of loans. They’ll charge a “fee” between 15% and 200% for your loan and the length will usually be about 1-4 months.
Keep in mind, they’ll probably give you a lot less money for your loan than what your item is worth. When working with a pawn shop, you’ll want to think about it carefully beforehand. Make sure you can pay the loan back on time or else you may lose your collateral or end up paying a lot of interest.
10. Try Online Peer-to-Peer (P2P) Loans
One new loan option that has appeared in recent years for people with bad credit are online peer-to-peer (P2P) loans. Sites such as Lending Club, Prosper, and Upstart are some of the most popular of these.
These sites offer loans that are funded collectively by individual investors. P2P loan sites often work with people who have bad credit and usually have lower requirements than traditional lenders. You can expect to pay rates from around 25% to 37% when you get an unsecured loan from one of these platforms.
Finding the Right Bad Credit Loan For You
If you’re looking for a bad credit loan you may feel like you don’t have any options, but after reading the list above you should realize that it isn’t the case. There are still some great solutions out there that can allow you to have a great chance of getting the loan you need.
Ready to learn more about bad credit loans and other financial topics? Explore our learning center to start educating yourself and to find out more.