How to Choose the Best Loan When You Are In Bad Credit?

August 20, 2012   ·   0 Comments

 

A bad credit score doesn’t mean that you cannot get any credit advances; it just means that there are only limited chances of getting cash advances on any loan if you have a bad credit score. The loan applied for can be of any type- mortgage, credit card, personal, bank, or a car loan; you may have limited access to the cash when you are in bad credit and will be charged at higher interest rates when compared with people with a good credit score. There are many lenders who offer these at various interest rates and choosing one among them could be a daunting task so one should make a wise decision before opting for any loan especially when you are in bad credit.

 

Here are a few ways that help to pick the best loan when you’re in bad credit:

   

  • Assets: If you own any major assets such as a car, home, or any other personal property then you can offer them as collateral to banks or financial institutions to get a loan, this could be the best option for an borrower because the loans taken against collateral are secured and lenders offer a reasonable rate of interest.

 

  • Co-signer: Even in bad credit you can get a personal loan with the aid of a co-signer, ask your family members or your friend who has good credit rating to act as co-signer. Then try to find out the loan that doesn’t require your co-signers collateral. Make sure you only take out a small amount on this type of loan because the larger the loan amount the more its interest rates will be. This can also be one of the good options because lenders also offer flexible interest rates and repayment terms.

 

  • Unsecured loans: You can still get approved for the loan if you don’t have any collateral. These loans involve a detailed study of the borrower’s credit history, usually the risk involved will be very high for the lender and as a result the they charge higher interest rates; you can research the internet to find different types of no collateral loans offered by various financial institutions.

 

  • Payday loans: These are the short-term loans and could be good option to avail small amounts of cash. This type of loan is mostly preferred by the people who are stuck in the middle of the month and cannot find any resources to fulfil their financial obligations. Payday loans are unsecured in nature and most of them are secured until your next payday. Though these loans have high interest rates they serve as an ideal option to get instant cash without the need for a credit check and collateral submission. The repayment period ranges from 14 to 30 days and some lenders can extend this period by imposing new fee charges.

 

Author Bio: Author name is Alicia. She is a tech writer from UK who is in Finance. You can catch her @financeport

Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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