Types of Loans Available for Lenders with Bad Credit

To provide for our needs, we need to be financially stable. Physiological needs, such as food, water, and shelter can be provided if we are financially capable. Financial stability can also provide for our emergency expenses, especially in times of calamities or sudden health problems.

However, there are times where we cannot provide for our needs and emergency expenses due to uncontrollable reasons. To bridge this financial gap, you might want to consider taking a loan.

Normally, it would be easy for you to take a loan. All you need to do is comply with the requirements, and you’re good to go. But if you have a bad credit score, it might not be that easy.

Having a bad credit score makes you appear as a high-risk customer to lenders. This means that you may not be able to pay what you owe. This makes it harder for you to get a loan. If taking a loan is your only resort, below are sources of funding that might help you despite your bad credit score.

Installment Loans

This type of loan is where you borrow money from a lender and pay it in a series of regular payments. These payments are called installments, hence, the name of the loan. The amount that you have to pay as installment is the amount of the money you borrowed plus the interest, divided into regular payments over time.

CreditNinja’s bad credit loans offer a 199 percent annual percentage rate, making it affordable and manageable. They offer a fixed monthly sum to ensure a steady and worry-free approach to your calculations. Timely payments also lead to the improvement of your credit score.

Payday Loans

When you see that your next paycheck is not within the next two weeks and you have no money to finance your daily expenses, it might be useful to take a payday loan.

A payday loan is a type of funding that gives you instant cash when the need for money is urgent. Typically, lenders don’t require much elaboration on where your money will go to. How it works is that you need to pay what you owed when the next paycheck arrives.

This instant cash comes with a high interest rate. If you think that your paycheck cannot cope with the interest rate, it might be better to wait on a better loan.

Cash Advances

Cash advances are more like a payday loan. Taken from the payday lenders, this type of loan requires you writing a check for the amount that you will borrow, plus the lender’s fee and the interest rate. After which, the next time you receive your paycheck, the sum of the check is taken from your salary.

Title Loans

Title loans are loans that require collateral. Examples of guarantees are cars, houses, or any valuable properties. How it works is that you’ll surrender a proof of ownership of your property. The lender will then assess your property and will give an estimated value for it. The value will then be converted into cash that is lent to you.

This type of loan might be risky if you don’t carefully plan on how to repay your debt. If you fail to make your payments, the lender will seize your property and sell it.

Family or Friends

Borrowing from your loved ones might be an option if you have a bad credit score. Normally, they would not look over your credit score because of your relationship with them. However, make sure that the money that they will let you borrow is not a necessary amount for their daily living.

An advantage of borrowing from them is that they may not put interest on what you owe them. If there is, it might be lower than other lenders. They may also be lenient on the time that you have to repay it fully. It depends on your reliability and intimacy with one another. Still, whichever it may be, make sure that you have to repay your debt.

Co-Signer

Some emergency expenses really need a significant amount of money. To find your way into getting a big loan, it might be a good idea to find a co-signer. A co-signer is typically a person who has a good credit score. The co-signer signs a loan with you. If you fail to pay the payment for the loan, he/she will cover for your payment.

To convince a co-signer to work with you, always be prepared. Prepare a detailed plan of where the loaned money will go and how you will repay your co-signer. Being candid will also help in convincing. If you really need the money, you need to show it. Lastly, get to every last detail of your loan as this will help you track down the essential parts of the loan.

Takeaway

Getting a loan is a significant risk and responsibility. To adequately address and repay your loans, you need to assess first your financial capabilities and the financial risks in taking a loan. With meticulous planning and accurate management of finances, you can turn a bad credit loan into an opportunity to improve your credit score.