If you have a bad credit score due to bankruptcy, late payments, foreclosures or collections, it can take seven years for these infractions to disappear from your credit history.
During those long years, you may need to get a loan for unexpected expenses. But you may not qualify for traditional loans.
Read on to learn about loans for people with bad credit.
What is a Bad Credit Loan?
People who have a credit score under 630 on a scale from 300-850 are considered to have poor credit.
Having bad credit limits your options when you find yourself in financial difficulties. If you need to pay for a car repair or have a medical expense you need to pay for, you may need a loan.
But, if you have a bad credit score, you may not get approved for a loan from most banks. Don’t worry. Loans for people with bad credit exist.
Loans for People with Bad Credit
Bad credit personal loans are designed to help people with low credit scores get access to loans. There are various types of loans for people with bad credit.
Here are a few options.
Personal Installment Loans
Personal installment loans are loans for a specific amount of money (at least $1000). You pay a set amount of money over the term of the loan.
Some of these loans have terms of three months all the way up to seven years. But, the longer it takes you to pay off the loan, the more interest you’ll pay overall.
Your best bet is to find a loan that offers you a doable monthly installment amount coupled with a loan length that is cost-effective.
Short-Term Cash Advance Loans
Cash advance or payday loans are short-term loans that help people get a lump sum of money.
You will have to pay these loans back in one lump sum at the end of your loan. Often, these cash advance loans are only for six months or less.
Payday loans are typically just two weeks or so for those who need money before payday.
At the end of your loan, you will have to pay the amount you borrowed plus any fees. If you are considering a cash advance loan, make sure you understand how much you will be charged for using this service.
Not all lenders have the same fees. You may find a better loan elsewhere so always do your research to find the most affordable lender.
Check out Credit Unions
Just because a bank won’t give you a loan, doesn’t mean that a credit union won’t.
Credit unions are non-profit institutions that are more likely to be willing to work with people who have poor credit. You’ll get to sit down face-to-face with a credit union worker and discuss your needs.
Though they will look at your credit score, they are more likely to consider other factors as well. And they will explain what they need from you in order for you to qualify.
You may get a better interest rate and lower fees at credit unions than you would by working with other lenders.
Bottom Line
We hope you found this article about loans for people with bad credit helpful. If you have bad credit, there are loans that can help you get the funds you need, right when you need them.
Next, learn how to use debt consolidation loans to make it easier to manage your debt.