Looking for loans, but have a bad credit score? Don’t worry! You still have hope as there are many loan options you can take advantage of even with a bad credit history. You just have to find a reliable lender who has transparent rates and fees, flexible terms and looks above your credit score. You also have to be very careful in avoiding scams and predatory lenders who can trap you in the cycle of debt.
Here are some types of loans you can get even with a bad credit score; as well as when you should, and shouldn’t get them.
You can get personal loans for any purpose, like home repairs or credit card consolidation. But remember that when people with bad credit apply for a loan, their options for a personal loan get smaller i.e. they can only borrow from $250 to $5,000. As well as, there are quite high interest rates, more fees and greater restrictions than personal loans for people with good credit. Also, apart from the credit score, there are other factors that affect your eligibility to get these loans.
The application process is simple and you get fast approval. Money is deposited in your account within a few hours. These loans are good for times when you’re facing a difficult situation financially and really need the cash as a last resort. Yet, it’s important to not rely on personal loans to get you by financially because you will end up paying much more than what you have borrowed.
When to Get a Personal Loan
- Pay your mortgage, rent, or car repair
- Keep current on utilities
- Replace/repair necessities in your home
- To stay current on your credit cards
When Not to Get a Personal Loan
- Debt consolidation
- Re-financing a student debt
- For a vacation
- Buy a car
- Entertainment or unnecessary shopping expenses
- Home improvements/renovations
If bad credit is holding you back, payday loans would be an ideal option to get instant cash for financial emergencies just like personal loans. However, payday loans with bad credit are usually of small amount and are given for a short period of time- like a week or two. These should be repaid on your next payday to keep the amount of interest at a minimum. There is no credit check; you just have to show proof of your income.
There is no doubt that a payday loan gives you access to cash right away. While with a personal loan it might take a few of days to get cash in hand. So make sure the terms of payday loans are something you’re comfortable with and that you can make timely payments.
When to Get a Payday Loan
- Catch up on your mortgage, rent, or car payment to avoid eviction
- Repair broken down vehicle
- Keep utilities from getting disconnected
- Replace/repair home appliances
- Medical emergencies
When Not to Get a Payday Loan
- When Not to Get a Payday Loan
- Vacations or other unnecessary purchases
- Home improvements
Like the above mentioned loans, you don’t need a credit check for getting auto title loans as well. Your car is used as collateral here, and the amount of the loan is less than your car’s actual worth. These loans have short terms so you should repay within that cycle to avoid the debt trap. Be careful while selecting the lender and make sure that you are not charged with high interest rates. If interest rates are extremely high, avoid it- as it may damage your credit score further.
So now, when you know how these three bad credit loans work. Consider all the options before applying for a loan with bad credit score and get the best one that works well with your situation.
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