Have Bad Credit, But Need A Loan?
It’s not difficult to get yourself in a financial hole that you can’t see a way out of. Oftentimes, the people who need the financial help that a loan would provide the most are the least able to find a viable option for a loan because their credit has suffered due to financial insecurity. It can be quite the vicious cycle, really.
If you have bad credit and you need a loan, there are options available to achieve financial freedom. Learn about how you can get access to a bad credit loan, and some of the pros and cons of different types of loans that may work for you.
Personal Loans for Bad Credit
Personal loans are one of the most favorably termed bad credit loan options out there. While not every personal loan will work with a bad credit score, there are many companies that will work with you. There are even some guaranteed personal loans available. Interest rates for bad credit personal loans range from 15-25% APR.
Unsecured Personal Loans
An unsecured personal loan is given with no collateral. Loan terms for this type of loan can vary a great deal, from the length of time you have to pay back the loan to interest rates to the amount you’re allowed to borrow.
Secured Personal Loans
A secured loan is one where the bank is provided collateral in order to secure the loan, leaving them taking on less risk. This means that if you don’t adhere to the terms of the loan, they take possession of the item put up for collateral to recoup their loss. Other than that, they’re often structured very similarly to unsecured personal loans.
Loans for Specific Items
If you need a loan for a particular item like a car or to pay tuition, you might consider looking for a loan created specifically for said item. You may find better terms on a more specific loan than you would a cash loan. Car loans for bad credit vary from roughly 10-15% APR.
Payday loans catch a bad rap, and for a good reason. The loan terms for payday loans are outrageous, with APRs that average 400% and a very short amount of time to pay them off. You generally have to pay off a payday loan plus fees with your next paycheck, so they aren’t much help in the long run.
Title loans use your car title as collateral against a short-term loan, meaning that if you’re unable to pay back the loan in full within the usual 30-day period, the company takes possession of your car. Like payday loans, they come with outrageously high fees.
Credit Card Cash Advance
If you don’t need much cash and you’re willing to shell out the often higher-than-normal interest rates that your credit card offers on cash advances, you may be able to tap into your credit card balances for a quick loan. This is obviously not an ideal option for you if you don’t have credit cards or room in your credit card balances for borrowing.
Loan Alternative for Bad Credit – A Sale-Leaseback
If the interest rates are too high, the loan amount is too low, or the deadline to repay the loan doesn’t give you enough time, what are your options then? A sale-leaseback program is a more flexible solution. Through a sale-leaseback, a company buys your home, pays off your mortgage, and you convert your home equity to cash. If you choose, you can either buy your home back when you’re ready or move and sell it on the open market. Remain in your home as a tenant, paying monthly rent while you work toward your goals. With the converted equity you receive you can pay off your debts and achieve financial freedom and stability.
Applying for a Bad Credit Loan
Bad credit loans often come with unfavorable terms. Before applying for such a loan make sure that you don’t have another way to tap into cash you already have, like by selling off unneeded assets or drawing some of your equity out of them. Once you’ve determined that you’ll definitely need a bad credit loan, make sure you shop around for the best terms and don’t settle for the first option that comes your way.
If you’re in need of a loan but have bad credit, there are options available to you. If you are struggling to qualify for a loan, it may benefit you to choose a sale-leaseback. Consult a financial expert to figure out which solution could be best for your circumstances.