Originally posted on https://bonsaifinance.com/5-things-know-applying-get-loan-bad-credit-lc/
Are you in a financial rut but can’t get a good loan? Is bad credit history stopping you from approaching the bank or credit union?
Believe it or not, you can get a loan with bad credit.
27.66% of American consumers have bad credit scores (between 300 and 600). If you’re within that range, it can be difficult to get a personal loan or student loan.
It’s a good thing that bad credit loans are available. It’s not as difficult as you’d think, as long as you know what you’re doing.
There are a few details to keep in mind when looking at bad credit loans. You’ll want to know what the requirements are and why these are better than payday loans.
Here’s a quick rundown of five things you need to know before you start the loan request process.
1. No Collateral Needed
The first thing you need to know when requesting to get a loan with bad creditis that you don’t need any collateral. Regular loan terms often require you to give some form of collateral.
The most common loan collateral include:
- Home property
- Stock or other financial investment
A bad credit loan doesn’t ask for any of these. This means there’s no loss on the borrower’s end. You will deal with higher interest fees as a penalty if you fail to pay the loan, but that’s understandable.
You also don’t need a co-signer. A co-signer is a person with better income and a good credit score. Some lenders require a co-signer and they’ll make that person pay the loan if you can’t keep up with the terms.
With bad credit loans, you don’t need to look for a co-signer. You don’t need to ask someone else to risk their credit score and finances for you.
2. Better Payment Plans
When you get a loan with bad credit, the lender understands that you can’t pay immediately. There’s a reason you need the money, after all.
Payday loans don’t take the sense of urgency and need into consideration. A payday loan asks you to pay the whole amount in one large sum on your next payday. That could be a week or two away from the date of borrowing.
If you’re deep in debt, you know it’ll be impossible to fulfill these terms.
What happens if you can’t repay a payday loan? They’ll charge you with 400% or more in interest. That’s almost a scam in some people’s eyes–and it can happen to you.
When you get a bad credit loan, you don’t have to deal with this risk. You’ll get better payment plans that are longer and more flexible. You can settle to pay the loan in a few weeks or a few months.
You also don’t have to pay one big sum. When you get a loan with bad credit, you’ll pay it in small increments. With the longer payment term and smaller premium, you get some room to breathe.
3. Customize Your Loan Terms
A bad credit loan also offers customization options. You want to remember this because you can work out a better loan term with the lender. You don’t have to settle immediately with the first payment plan they give you.
Through this process, you can borrow more than what you’d get in a payday loan. You can customize the loan according to your income and needs. You’re also likelier to get a lower APR compared to payday loans.
If you can’t follow through with the payment plan, the lender can help you restructure it. You might have to raise the interest to get a longer payment plan. Other loans don’t offer this since they need you to have a decent credit score to qualify.
4. They Look at Your Income, Not Credit Score
In 2015, the average credit score was 695.
The lowest you can get is 300 and the highest is a perfect 800, but very few ever reach those extremes. As mentioned, not everyone can qualify for a loan if they don’t have a score close to the average rating.
The good thing about getting a bad credit loan is that your credit score doesn’t matter. They don’t look at your score at all and most of the time they won’t ask for your credit rating.
Instead, they check to see how and when you can pay according to your income.
You’ll need to provide some proof of income. It doesn’t mean you need to have a job. As long as they see you get a regular deposit, even if it’s from disability or otherwise, then you might qualify to get a loan with bad credit.
Once they see how much money you get per month, the lender will structure how much you can borrow, how high your interest rates will be, and the maximum length of time to pay off the amount.
5. It’s a Quick Process
When you request a regular personal loan, it might take a week to get approval, especially if your credit score is below average.
This is not the case for an emergency bad credit loan. Filling out the request form and getting a reply only takes a few minutes.
How long before you see the money deposited in your account? As soon as you get approval, you can expect the money within one business day. This might extend to a few more days depending on your bank.
If you need a loan and you need it quickly, get a bad credit loan. It’s the fastest and most reliable option you can opt for, especially if your credit score isn’t as stellar as you’d like.
Yes, You Can Get a Loan with Bad Credit
Do all these details sound appealing? Do you need a loan but can’t qualify at the bank due to bad credit scores?
We’ve got you covered with our bad credit loans. We offer some of the best loan terms and you can get an approval in minutes.
Still have some questions? Do you want to understand how our loans work?
Please contact us today. We can offer you the best loan options that fit your budget and circumstances.