Bad Credit Personal Loans
What is a Bad Credit Personal Loan?
A personal loan, also known as consumer loan, is an amount lent to an individual that’s paid back in a set amount of time.
Unlike student loans, who have put around 44 million people in debt, or business loans, you can have no problems paying personal loans because of their small amount. You’re only borrowing a few hundred or few thousand dollars, not enough to buy a house or launch a business.
This money can is for covering medical bills, tuition fees, or household renovations.
There are 2 different kinds of personal loans.
These are kinds of personal loans that have high interest. They’re unsecured because the lender doesn’t require you to provide any collateral to be able to apply for a loan. This tends to mean that you have a solid financial background that makes you a reliable borrower.
These loans, on the other hand, require the borrower to present collateral in order to have their loans approved. Having to apply for a secured loan tends to mean that your history is not all that reliable for the lender.
Failure to pay the loan in time will often lead to the borrower claiming possession of whatever asset you’ve left as a collateral.
Pay Off High Interest Debts
There are plenty of reasons for finding out more information about bad credit personal loans. One of the most important reasons for learning more about these types of personal loans is that people with bad credit have a need for money.
Just like other people who need financial help, those who live with bad credit need the money to help them get out from under the debt that seems to overwhelm them.
Regain Your Financial Footing
Another reason for these types of personal loans is to simply pursue financial dreams. Some people might have been waiting for a financial windfall to come their way, while others have been sitting by the wayside in anticipation of an opportunity in the form of higher education or even a small business venture.
No matter what might have been behind the need, a personal loan of this type can help those saddled with high interest debt accumulating interest month after month.
These types of loans exist to help people in these types of situations regain a solid financial footing to establish themselves.
Make Financial Moves for Advancement to Pursue Your Financial Dreams
Finally, another good reason to find out more about these types of personal loans is that it can provide a simple means for making financial moves for advancement.
- You can go back to school and finish a degree.
- You can make repairs or innovations to your home
- You can take a long awaited vacation
- You can pay off a high interest car loan or buy a used car
It is totally up to you how you use the money from one of these types of personal loans. There are no restrictions on the usage of the funds. It is totally up to you. Such personal loans place your power for making financial moves firmly in your own hands.
Bonsai FinanceOur take: Online marketplace to find you a personal loan offer that matches your needs Show more
Credit Score Loan Size/Amount Loan Term APR Origination Fee All can apply $100 - $15,000 1 - 60 5.99% - 35.99% Varies by lenderCredit ScoreAll can applyLoan Size/Amount$100 - $15,000Loan Term1 - 60APR5.99% - 35.99%Origination FeeVaries by lenderOur take: Online marketplace to find you a personal loan offer that matches your needsShow more
What Bad Credit Personal Loans Have to Offer
Bad credit loans have a lot to offer, especially to those who have a spotty credit history.
Whether your bad credit score is due to late payments or even missed payments where you have fallen behind on credit cards or loans, you can benefit from the many characteristics of such loans.
- Competitive fixed interest rates on the personal loan amount
- Definitive loan terms of up to 18 months
- Monthly payments via a verified bank accounts
These personal loans offer you an opportunity to take control of your financial situation without overextending yourself and digging yourself further into high interest debt. You can securely navigate your financial future with options and choices rather than living from paycheck to paycheck with little to no hope of a clear path to financial freedom.
What Do I Need to Get a Loan?
Now that you know what a personal loan is, let’s talk about what you’ll need to apply for one. Requirements may change from one institution to the next but the following are the common factors lenders will ask from you:
1. You’ll Need Proof of Identity
First, you will need to have any form of ID to apply for a loan. They require you to present this in the name of national security, to make sure that the person the bank is funding a non-terrorist organization or individual.
When you first apply for a loan, make sure that you have at least 2 forms of identification complete with your name, current address, date of birth, and any information that will allow people to identify you by.
Any ID issued by the government will work, even student IDs, provided you’re under 18 or are under special circumstances that allow you to be a student.
This is also done to keep track of future loans and applications, if you’ve paid any previous loans before applying for another one, for example.
2. You Need Proof of Employment
You will then need to show a proof of employment because this is where people can see if you’re indeed employed and have a regular income. (Take a look to our article about allotment loans for federal employees)
This form can also be a basis of whether or not your income is enough for you to be able to pay your loan in the requested amount of time. If you have too little income for the amount that you’re asking for, you may not get your loan approved.
3. Know your Credit Score
In order to qualify for the best rates for personal loans, you will need to have a good credit score. A credit score is a number that banks use as a basis on how likely you are to repay a loan.
Whether your credit score is high or low will depend on multiple factors including the average time between your loan and when you pay it, the types of credit that you have, and the limits of your credits and how much of them you’re using at the moment.
While there are a few people who offer no credit financing, a good alternative is a bad credit personal loans.
The best option is to improve your credit score. You can do this by keeping a good track record of your finances over time and management of your loans.
This means that you will have to pay your bills in time, your debts must get cleared, and the balances on your credit cards must get cleared as well.
As you can see, it takes a long time to improve your credit score. So, if you can, try to avoid spending money you don’t have. Cutting back on expenses does a lot for your score in the long run.
4. Have a Solid Credit History
A credit history is a record of the repayments of loans you’ve had in the past. You can acquire a credit history from any bank, credit company, or even any government building authorized to give them out.
Banks use this to tell how responsible you are with your finances. This will determine the parameters which you will have when you get your loan approved. The parameters include the interest rate you will pay and the length of time you have before you have to pay it to completion.
In addition to that, a solid credit score will not only help you obtain credit, it will also help you land a job. It can also help your favors in getting a decent place to live in.
5. Applying for the Loan
Now that you have everything in order, it’s time for you to apply for a loan. Your usual bank is often the go-to place to get a loan, they have a record of your finances in hand, and they are a familiar for you to talk to.
They will examine your credit score and credit history together with your current annual income to determine whether you get a loan. If you do, then they will now set the parameters that you will have to follow.
6. What Comes Next
After your loan gets approved and the parameters are set, you will now get the amount you’ve requested. Sounds easy, right?
Yes, but we haven’t mentioned that your loan can take days or sometimes even weeks before it gets approved.
There will also be interest fees that come with your loan. Sometimes, even when you have a good credit score, your interest fees will be too high for you to be able to afford to pay in the given time. There are also compound interests that can make it harder to manage your finances.
Compound interests are what you pay for interests of previous loans that were unpaid. So, if you’ve had multiple loans before, this may have you paying for more than you can afford to pay for.
If you fail to collect enough to be able to pay your debt, you will first get a call from your creditor. They often will remind you and tell you if you’ve gotten additional charges from failing to comply with the terms.
If you still haven’t paid by then, you may find that your account will fall into default, meaning that your credit score will get damaged and you will have difficulty in securing future loans.
The last thing they will do is call you to court and demand that they get paid what they’re owed.
7. Where Else to Go?
We’re not saying that banks are a bad choice if you’re getting a loan, it may only cause complications for you in the long term if you don’t manage your finances well.
That said, there are also a number of other places where you can get a loan.
Payday lenders are often a small company that provides you with a high-interest loan. They will require you to pay what you can on the day of your next paycheck.
Bad Credit Lenders
If you have a bad credit score and thinking of getting a personal loan, there are companies and people who can entertain your needs.
Bad credit lenders give you the chance to be more in control of your terms on the loan and they don’t penalize you if you’re able to pay your loan back earlier than expected.
Peer-to-peer lenders (also known as P2P lenders) lend money to small businesses and individuals through online means.
Also known as marketplace lending, P2P lending expects to have an approximate 5,976.1 thousand users by the year 2022, and with the benefits of P2P lending, each user may have higher returns gain through transactions.
In addition to these lenders only taking hours to process and approve your loans, they also don’t require you to have amazing credit scores to apply. They only need to see IDs and proof of employment, and sometimes collaterals.
Get a Personal Loan Today!
Once you’re done reading this guide, you no longer have any trouble getting a personal loan. The question “What do I need to get a loan?” will never bother you again!
But why stop here?
If you found this list useful, then check out our website! Discover more blogs like this one, that tells you the basics of the Discover It miles card.