Studies have shown that only about 25 percent of Americans are walking around debt-free. Everyone else has at least a little bit of debt attached to their name with the average American carrying around about $38,000 in personal debt, home mortgages not included.
Do you wish there was a way for you to get yourself out of debt so that you could improve your credit report and bring your credit score up? As it turns out, there is a way to do it, as long as you’re willing to work at it.
There are small personal loans for bad credit available to those who wish to pay down credit card debt, take care of medical bills, and more. But before you start applying for them, it’s important to know the best way to go about doing it.
Here’s how to take out a small personal loans for bad credit.
Check Your Credit Score
Before you begin applying for personal loans for bad credit, it’s a good idea for you to take the time to see what your credit score actually is. Almost one-third of Americans are in the dark when it comes to their credit score.
Take a look at your credit score to see where it stands today. For all you know, you could have much better credit than you think and be eligible for a regular personal loan that’s often extended to those with good credit.
If nothing else, checking out your credit score will give you a much better idea of what kind of shape you’re in financially. You’ll know just what you need to do to get yourself back on the right path once you have your credit score in mind.
Consider How Much Money You Need
If you check your credit score and find that you do need to apply for bad credit personal loans, the next thing you’ll want to do is think about how large of a loan you need. Most personal loans range from $500 up to $15,000.
You do not want to take out a loan for above the amount you need to pay off whatever debt or emergency you’re going to be covering. You’ll be asking for trouble if you borrow money without putting any thought into how much you need.
Crunch the numbers on your end and come up with an exact amount for your personal loan. This will make it much easier for you to apply for loans and eventually be accepted for one.
Avoid Applying for Too Many Loans at Once
Once you know how large of a personal loan you’re going to apply for, you might be tempted to dive headfirst into a big pile of loan applications. There are many people who send out a dozen loan applications in the hopes of catching the eye of at least one lender.
In theory, this sounds like the right approach to take. But in reality, you could actually hurt your credit score and get denied for every loan application simply because you chose to apply for too many loans at once.
Creditors don’t like it when they see that people have sent out a flurry of loan applications at one time. You’re much better off working with a company like Bonsai Finance that can help you compare installation loans from a long list of lenders.
Compare Loans From Different Lenders
The great part about working with a company like Bonsai Finance is that they’ll do just about all of the dirty work for you when you’re looking for small personal loans for bad credit.
Under normal circumstances, it would be up to you to find lenders that offer personal loans and apply for a loan from each of them. But with Bonsai Finance on your side, they’ll take the necessary information from you and get you loan offers fast. You’ll be shopping around for the right personal loan in no time.
The only thing you have to do is sit back and wait for Bonsai Finance to provide you with information on the personal loans that are available to you through different lenders. You’ll get the chance to compare each loan offer on your own time before deciding which one is best for you.
Keep an Eye on Interest Rates
While Bonsai Finance does most of the dirty work for you when you’re hunting around for small personal loans for bad credit, you will have to put in some effort on your part. Once it’s time to break down each loan offer you receive, you’ll need to perk up and start paying attention.
The first thing you should look for when you’re checking out each personal loan offer available to you is the annual percentage rate (APR) that a lender is offering to you. This interest rate will ultimately determine how much you have to pay above and beyond the loan amount over the course of your loan repayment period.
There are many personal loans for bad credit that come with high-interest rates attached to them. But there are also some lenders that will offer lower rates than others.
Your job is to find the rate that will work best for you based on your income and lifestyle. You want an APR that is manageable and that will provide you with an opportunity to pay back your personal loan as quickly as you can.
Think About Loan Terms
In addition to carefully considering which interest rate is best for you when you’re checking out different personal loans for bad credit, you should also remember the personal loan no credit check terms. Lenders will often provide you with loan terms ranging anywhere from one month all the way up to 60 months.
Since you’re taking out a small personal loan, you probably won’t need a full 60 months to pay it off. But you might need 12, 24, or even 36 months to pay down the balance on your loan if it’s for more than a few thousand dollars.
Work out a budget for yourself moving forward so that you know you’ll be able to pay back a personal loan in the time that a lender wants you to pay it back. Some lenders may request additional information from you concerning your income and your current checking account balance at this point.
Steer Clear of Unreasonable Origination Fees
Some, but not all, personal loan lenders will force people to pay origination fees when they take out a loan. But the origination fees tend to vary from lender to lender.
It’s not completely unreasonable for a lender to ask you to pay an origination fee. They are, after all, providing you with a large sum of money on very short notice. But it is unreasonable for them to make the origination fee something that will tack on a substantial amount of money to your loan.
It’s good to gauge how much the origination fees are through different lenders. You might be able to pit lenders against one another and find ways to bring origination fees down.
Select the Best Loan for Your Situation
After you’ve completed the other steps listed here, you’ll finally be ready to throw out most of the small personal online loans for bad credit that you’ve been offered and pick the best one.
You should not make this decision lightly. Even though you might be stressed out as a result of debt or a bill that just popped up out of nowhere, you shouldn’t just take the first decent offer given to you.
Working with Bonsai Finance gives you the opportunity to weigh your options and choose the best loan. Take full advantage of this and take all the time you need to decide which loan will work for you.
Start Paying Your Personal Loan Back
At the end of all this, you’ll be able to finalize your installment loan application and obtain the personal loan you need to pay off debt or whatever bills you need to get squared away. But you’ll just be getting started as far as repaying your loan.
Lenders will often ask borrowers to start paying a personal loan back immediately. That means you need to be prepared to send your first loan payment to your lender within about 30 days.
Make sure you’re ready to do this. The last thing you want to do is miss one or two payments since that could take a huge toll on your credit and subject you to extra fees that will make your loan difficult to manage.
As long as you worked out a budget for yourself earlier, you should be more than ready to start paying back your personal loan right away.
Apply for Small Personal Loans for Bad Credit Today
Having bad credit shouldn’t stop you from trying to apply for a personal loan. There are so many small personal loans for bad credit available for those who need them most.
There are also credit cards that are designed to help those who don’t have the best credit in the world. Read our blog to see if a personal loan or a credit card would be best for you. Here are some other articles you might find helpful:
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