With a good credit score, finding a lender who offers your loan at a competitive interest rate becomes easier. But some urgent needs may compel you to seek a loan with low or poor credit health. In that situation, the only option can be seeking a bad credit loan. Those who lend money to people with damaged credit scores charge high-interest fees. However, the relief is that you get different loan options based on your need. All loan types are broadly divisible into two groups – secured and unsecured. Let’s learn about them quickly.
Car title loans
It’s a secured loan type for poor credit. Still, be ready to pay a higher interest rate. When you apply for this loan, you put your car ownership at stake. The lender can sell the car to recover their money if you default on your repayment. One can repay the amount in a month or two years based on the agreement. If you struggle to pay back, you can request an extension, but it will have more demanding conditions. Credit-challenged people opt for these bad credit loans for their easy availability. Some lenders usually quickly process the amount.
One can opt for these short-term loans when they don’t have any other option left. You can get a maximum of up to USD$ 5k at a steep interest rate. The repayment period can be as little as 14 days. A lender may not need your credit history as it’s an unsecured loan. However, they may enquire about your income to understand the risk. If everything goes right, you can receive the amount quickly. In this loan repayment process, you clear your debts in one go instead of paying installments.
Debt consolidation loans
You take this loan to combine various debts into one to make your monthly repayments easier and affordable. Interest rates can be lower, enabling you to save a few dollars. Plus, it can help you improve your credit score. There can be a little scrutiny of your financial background and credit health. But as mentioned, your credit score can improve if you repay it on time. Find credit repair companies if you wish to do more to get your credit ratings into shape. Authentic companies follow a set of systems and processes to help you legitimately for a long-term impact. Some platforms contain their details. You can access them for guidance. Nevertheless, consolidation loans can come in handy in repaying medical, student, personal, and credit card debts.
There is always a way to solve a problem. A bad credit loan is just that. But it would help if you were wary that it is an expensive loan type. If all the other doors have closed, leaving you in need of arranging urgent funds, then only you must explore these options. At the same time, you must know what you can afford to pay and what requires careful consideration. For instance, anything with a shorter repayment cycle and high-interest charges can be the last resort, especially if you cannot abide by the deadline. Also, seek lenders who notify timely loan repayments of their clients to credit bureaus. After all, you know the benefit. Isn’t it?