Bad Credit Loans
Bad credit loans are loans given to people who for some reason or another have a poor credit rating. A person’s credit rating is considered poor when the credit score falls below 580. People who have filed for bankruptcy are also considered poor credit risks, and may be unable to obtain a conventional loan. The only loan they may be able to get would be a “bad credit loan”.
Bad credit loans are available; however, there will be some differences between them and “regular” loans. You can almost certainly expect to have a higher interest rate than you would if your credit was in good shape, and you may not be able to borrow as much as you need.
Some financial institutions, such as banks, do not even offer bad credit loans. A credit union may offer this type of loan; however, that organization may require you to have someone co-sign with you on the loan, and may also have you to put up some type of collateral (such as personal property or a car) in order to secure the loan.
If you do find a bank or credit union that will give you a bad credit loan, the difference in the interest rate on that particular loan and any other loan the financial institution makes may not be that much higher; however, it will not be the lowest interest rate offered.
Independent loan companies do offer bad credit loans. Some advertise that you will get a loan regardless of your credit score or history; others may obtain your credit history, but will still approve the loan. You can definitely expect to be “dinged” with a high interest rate at one of these places, however.
Some people do not realize or think of it in this sense, but a title loan is a type of bad credit loan. When you do stop to analyze the situation, you immediately see that a title loan is truly a bad credit loan. Think about it: most title loan agencies do not require a credit check; they only require a “clean, clear” title to your motor vehicle. Basically, what you are doing is “putting your car up as collateral” for a loan.
Unless your credit rating is such that you know there is no possibility of you being able to obtain a loan through any other means, a title loan should be your last resort. The interest rates are exorbitant, and there is too much of a risk involved. Miss or be late on one payment, and there goes your car, because you have given the business the ownership papers to the car.
If your credit rating is poor, but you find yourself needing a loan, don’t hesitate to go to another lending agency BEFORE you even consider going to a title loan company. Most agencies are willing to work with you, and will try to accommodate if there is any possible way.
No matter where you go to get a bad credit loan, only borrow the minimum amount you need. This is not the time to make an impulse buy or an extravagant purchase. Once you have gotten the loan, make the payments on time each month. Depending on the repayment period, you may be able to negotiate for a lower interest rate after you have made a series of regular payments.
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Tags: bad credit loans, high interest, loan, Loans, poor credit, title loans
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