Having bad credit history can make it difficult for a person to get approved for standard loans. Subprime loans are often associated with excessive fees and surely nobody wants a high-rate loan. However, there are times when taking out a loan is really necessary and during these moments, the only possible option is to apply for a bad credit personal loan. Does this mean you have to settle for high interest rates and fees?
Certainly not! Compared to lenders that require good credit history, lenders who offer bad credit loans do impose higher interest rates to make up for the risk. However, by comparing lending companies, you should be able to find the lender that gives the best possible deal for someone who has room for credit improvement.
Secured Personal Loans for Bad Credit
If you are in need of a personal loan for financial emergencies, you can still find a bad credit loan with reasonable terms of repayment. Do you have a property which can be used as collateral? If yes, you can get a secured personal loan with a lower rate and more flexible repayment period.
The collateral can be a home property, a vehicle, a lot, or other assets with a higher value than the proposed amount of loan. Most lending companies are willing to extend 5 to 25 years for a secured bad credit personal loan.
100% Guaranteed Bad Credit Loans
On the other hand, if you do not want to submit collateral in exchange for the amount you borrow, you can try to find unsecured personal loans for bad credit. As can be expected, the maximum amount that you can borrow can be limited to a smaller value. And because of the absence of security, you are expected to pay back the loan within a shorter time period.
Bad credit loans that offer a hundred percent guaranteed approval are also called payday loans or cash advance loans. Lenders who extend these loans obviously do not perform credit report checking. To be approved, the borrower must be of legal age and must have an active bank checking account.
The maximum amount that you can borrow for an unsecured bad credit loan will usually not exceed $1,000. However, if you can show proof of a stable income, the lender may consider giving you a larger loan amount based on the value of your monthly salary. The maximum loan limit for these loans may depend on the State where the lending company operates as there are States which are governed by specific laws on payday loans.
Consumers are strongly advised to consider their repayment capacity before acquiring personal loans for bad credit. Remember that you can use bad credit loans for rebuilding your credit score provided that you will be able to keep up with your payments. Before sending in your loan application, make sure that your lending company will report your payments to the consumer credit reporting agencies. Last but not least, see to it that you are clear about the Terms and Conditions of your lender.
