Are you facing a financial crisis but have bad credit? You might need a personal loan for so many reasons. It may be for covering an unplanned expense or pay off your credit card debt, but you don’t have good credit score. In such situations, you may be worried about your eligibility to get a personal loan. Even if you have bad credit, but need a helping hand, you are still eligible to get a loan. However, you need to complete some formalities to obtain that. Let us check the best bad credit loan options in this post.
What is a Bad Credit Loan?
Bad credit is a common term these days, but not many people do not know about what it is. This loan aims at people with a bad credit history. Get an ordinary personal loan from high street banks can be difficult for those with poor credit history. Credit scores can vary based on the model, and a good credit score is anywhere between 700 and 850. If your credit score is between 620 and 679, it is a fair credit score, whereas it falls below 580 is considered as bad or poor credit.
Difference Options for Bad Credit Loans
Getting a personal loan can help you in many ways. You can make major purchases or consolidate debt without using credit cards with the help of a personal loan. However, it may be difficult for a person with a bad credit score to get a personal loan. You can find several good options to get a small loan, even if you have bad credit to meet your financial needs. But most of these options are risky financially. Here are the best loan options for people without a good credit score.
If you approach a payday lender, he does not check your credit score, instead, lend you money immediately. Such loans are made for a short-term period and for $500 or less. The loan amount will be due on your next payday. The disadvantage of such loans is that it carries very high-interest rates. However, a payday loan can be a good option for those who look for a small personal loan for a short period.
Like the payday loan, title loans also come with high-interest rates. But it can be a suitable option to overcome your present financial situation. You need to pledge the title of your vehicle against the loan and cost it if you fail to pay up. The high-interest rate of such loans makes it difficult for many people to repay it. Ensure to pay off the debt with its interest to avoid losing the vehicle by taking this loan.
Pawn Shop Loans
It is another alternative for a personal loan for people with a bad credit score. As a borrower, you need to bring an item of value against the small loan amount that you borrow. You will be able to get the item back once you repay the loan before the term. The term varies for Pawnshop loans from the state to state. High-interest rates and expensive fees are the distractive features of this kind of loan option. The pawnshop can keep your item of value if not repay the loan in time and sell it.
Many people approach their employers for a small loan amount in the short-term. They can inquire for an advance from their paycheck during a financial crisis, but cannot approach for a high street bank for that. But getting the advance amount depends on your relationship with your employer. You can also try to get a small cash advance from your credit card. It can be a way to get money against your available credit instead of purchase anything. Although lenders need to pay high-interest rates, many credit cards provide this feature to the credit card owners. But the interest rate is less than the payday loans.
Payday Alternative Loans
You can approach some federal unions if you need a small loan amount between $200 and $1000. But the borrower needs to fulfill several requirements to get this loan like the interest rates of it should not be more than 28%. If you are looking for some immediate cash requirements, you can consider payday alternative loans.
Online Lenders for Personal Loans
Many online lenders offer small personal loans for those with a bad credit score. These are installment loans as the borrower can repay the amount that they received with interest over several predetermined payments. Many individual investors fund such loans instead of financial institutions. A loan from an online lender can be a better option for people with bad credit, as it is far cheaper than a payday loan.
Another alternative to a small loan if you cannot qualify for a personal loan from a high street bank because of bad credit is budget-cutting. You can consider selling items of value if you have assets to be liquidated. Sometimes, your credit card company may offer you a scheme to reduce the payment and interest. You can also consider approaching your landlord to break up the payment into two or three parts or provide some time extension to make the loan easily repayable.
Home equity line of credit (HELOC)
If you are in a financial crisis, but with a poor credit score, you can think of a home equity line of credit if you own a house. It can be a way to meet your short-term Loans cash requirements.
Friends and Family
You can approach your family and friends for a loan if you are in a financial crisis. Getting all the terms and conditions of the loan in writing like the monthly payments, interest rate, and due dates can be a good idea. As a borrower, you can treat the loan from a friend or family member as a loan from a traditional lender. Ensure to repay the money in time, otherwise, your relationship could hurt if you fail to repay the amount.
If you are needy, you can find many options for a small loan, even if you have a bad credit score. Once your financial crisis was over, and you repaid the entire loan amount, ensure to make a budget and save some money for an emergency.
My name is Harold Mitchell, I’m part of the editorial team at the Payday Locker. We offer Online Payday Loans in Michigan. Payday locker is a third-party agent that helps you connect with a lender and get money instantly.