How to Obtain a Bad Credit Loan

Posted by on Oct 12th, 2009 | 0 comments home title

Looking for bad credit loans? There are some good options out there if you happen to have poor credit and need a loan. Let’s explore just how you go about getting bad credit loans.

Now, the first thing you should know is that there is no real “good” loan solution out there for you when you have poor credit. The bottom line is that poor credit will cause you a lot of problems when looking around for any credit services. Don’t think that you will get the same sort of deal on loans as people with good credit can command – you won’t. But, if you really need a loan and you can’t wait a year or two to fix you’re your credit, then there are some loan options out there for you.

Secured Loans for Bad Credit

One sure way to get a loan is to consider putting some sort of collateral down for the loan. This is called a “secure” loan because the loan is “secured” or backed up with solid assets. Now you can get all sorts of secured loans – secured personal loans, secured mortgage loans with poor credit, secured auto loans, secured business loans, etc. If you want to get a traditional loan (i.e. a loan from the bank), then you are going to have to look at getting a secured loan. Banks, especially in today’s economy, will not give out unsecured loans to people who have bad credit history.

Secured loans always have the lowest interest rates because the loan is backed up and considered “less risky” than unsecured loans. However, if you fail to pay back the loan, you lose whatever you have as collateral – usually a car or home.

Unsecured Loans for Bad Credit

Unsecured loans are loans that are given without some form of security. These are the most popular types of loans out there and the most difficult to get. If you want an unsecured loan from the bank, you need good credit, period. Yes, there may be some way for you to negotiate an unsecured loan if you have a good income and you can come up with some very good excuses as to why your credit history is bad. But in general, an unsecured loan from the bank when you have bad credit history is out of the question.

Now, you still can get unsecured loans if your credit is not good. Payday loans, for example, are given out without any sort of credit check. Payday loans are lower amount, short term loans. Most payday loans are between 100 – 2000 dollars. You typically have a couple weeks to a month to repay them. If you don’t repay them, you face some of the highest interest rates in the loan business.

There are also online “bad credit lenders” who specialize in giving out all sorts of unsecured loans: bad credit mortgages, bad credit personal loans, etc. Keep in mind that if you look at bad credit lending, you are going to pay much higher interest rates than standard loans – avoid these unless you are sure you can afford the monthly payments.

Getting bad credit loans can be tough, but there are some concrete options available to you. Your long term goal should be to fix up your credit so you can get better loan rates in the future.