Loans for bad credit is a growing industry as more and more people find themselves falling below the criteria for credit approval ratings of regular banking institutions. But where and how can you apply for a bad credit loan?
Banks, traditional loan providers and other financial institutions do NOT provide bad credit loans. This is because they consider a bad credit rating, history or record to reflect badly on a person’s future ability and responsibility to honor their loan agreement.
However, this does not mean that you can’t get a loan from these providers if you have bad credit. Some providers will approve a loan if additional security, collateral or a guarantor for the loan can be provided. A bad credit rating will however affect the interest rate and other fees related to the loan.
2. Online Loans For Bad Credit
There are literally hundreds of online loan providers that offer bad credit loans. Most of these provide a quick and efficient loan application and guarantee loans of specific amounts without prior credit checks.
However, these loans also come with interest hikes and often have additional charges that exceed those charged by regular banks and loan institutions. Some providers may still run a credit check and allow the score to affect the loan amount offered as well as the interest that is charged. People who have been blacklisted may also be required to provide additional security in order for the loan to be approved.
Online loans for bad credit are normally only for small amounts over a short repayment period. Some loan providers will however offer larger amounts over a longer term in the event of an asset purchase like a car or property that can stand as surety for the loan amount.
3. Cash Loan Providers
Cash loan providers like pawn shops or quick cask loan services also provide loans without running a credit check. They provide cash in hand, in small amounts, over short repayment periods, often at excessive interest rates. This is the least preferred method and mostly a last resort for emergency cash for bad credit loans.
It is important to weigh up your options carefully and do some research into the different bad credit loan options available before taking out a loan. Apply with regular or traditional loan providers first and compare interest rates from online bad credit loan providers to get the best deal.