Although there are many non-bank lenders in the market who offer financial assistance to people with poor credit, it doesn't mean that you can just simply apply for it. There are many things you must consider before you take up the loan. Bear in mind that this particular loan must not be used for purchasing luxurious items or just for fun. It can only be used to pay off your debt or for emergency use.
Contrary to common beliefs that unsecured and bad credit loans are coming with higher interest rates and additional charges, most poor credit loan products today are very practical and are cheap. They come with lower interest rates especially when they are in shorter terms like payday and cash advance loans.
The borrowers, like non-homeowners and tenants, who do not have any assets to pledge with the lenders can take up the unsecured form of these loans. The money available lies in the range of 1000-25000 through this asset-free form of borrowing. The borrowers are required to repay these loans in a term of 6 months to 10 years. Online research helps the borrower in getting low rate deals.
You need some form of collateral to apply the bad credit loan, which can reduces the risk for the lender and make the loan a secured loan. A secured loan actually is in the borrower's best interests if they are sure they will have no problem paying the bills each month. Unsecured loans will, on average, cost more and have a higher probability of putting the borrower in a cycle of debt.
Pick out the lenders who are offering interest rates and repayment terms you can live with. Once you have a list, check out their credentials. You might want to check the customer service history of each by checking their listings and ratings with the Better Business Bureau (BBB). If the lender is not listed there, find another. Some companies are actually loan brokers. You submit an application and the company will go out and find the best loan for your situation.
There are a couple of reasons why it is a good idea to apply for an unsecured loan if your credit is poor. The first is that you can apply for the loan that you need. Second, by making payments on time, your credit score will go up. When your credit score goes up, you become less of a credit risk. In order to apply for a bad credit unsecured loan, you must be 18 years old, be in a job for at least three months and have a good repayment record on your credit ratings for at least six months. The interest rate would depend on how much you borrow and the period you plan to pay it back over.
Have more questions on bad credit or wondering how other issues are impacted? Look over our Bad Credit Loans. We have several articles on the following subjects: poor credit loans, car finance, credit cards, free credit reports, interest rates, loans, and mortgages. Read more at Finance4car. Take a look around and you'll find that we're here to help you. We work to bring you relevant information, so you can be informed on handling your credit situation.
