Got a Bad Credit Score? Here are 5 Types of Loans You Can Go For
By Lauren Cordell
Do you have a bad credit standing? Are you struggling to get financing options? If so, you're not alone in this world having that kind of problem. Credit score problems are among the financial-related challenges of borrowers. Fortunately, there's still hope.
There are several options you can choose from when it comes to financial assistance. From bad credit loans to home equity loans, you can opt for one of the following loans we will discuss today if you want to have some quick cash for an emergency. Here are some of them.
Bad Credit Loans
Bad credit loans are personal loans like CreditNinja Online Loan that are tailored for people struggling with poor credit. It offers the same cash assistance as a personal loan, albeit with a few key differences.
First, it has a higher interest rate. Higher interest is placed on bad credit loans to offset the risk of default, which is common for people with bad credit. Not only that, but it also has restrictions regarding the amount you can borrow.
In short, your borrowing limit is minimal. If you think you haven't seen any company offering bad credit loans yet, it's because "bad credit loan" is more like an unofficial name given to loans offered to people with bad poor credit. Usually, they are in the form of regular loans but with a key difference like the ones we mentioned above.
Payday loans are very convenient for people living from paycheck to paycheck and, at the same time, have poor credit. These are loans with no credit check required. Some lenders have credit checks, but it's usually only for formalities, and you still get at least a 90% chance of getting your payday loan approved. So how do they work?
Payday loans are small-term loans that allow you to borrow a small amount of cash that must be paid on your next salary drop. Typically, the amount can be between $100 to $10000. However, their reputation is not so good since the interest can go to three digits, and there are a lot of fees that you have to pay if you miss repaying it. However, they're not so bad. If you pay on time along with interest, you won't be stuck on a repayment cycle, a trap many people fall into.
If you have a credit card, one thing you can opt for if you want cash with no credit check is cash advance. A cash advance lets you get funds from your credit limit as a small loan.
The interest is usually separated from your main account and the balance. It means that you'll have to pay for the cash advance separately. Cash advances typically have steep interest rates since, often; the interest will be based on the interest you have on your main credit card.
Car Title Loans
If you have a car that isn't used much but still working, you can opt for a car title loan. With this loan, you can borrow at least 20-25% of your car's market value as a small loan. However, there's a catch. You have to own your car outright and put up your car title as collateral for the loan.
Yes, this is a secured loan since you'll have to give collateral to get approved. And since it's a secured loan, little to no credit check is required. However, they also have steep interest rates and monthly repayments. But they are easily accessible if you have a working car.
Home Equity Loans
It's also a secured loan, but your house is the collateral. Before the lender gives you the loan, they have to determine the current market value of your house first and then put your equity in the house in the equation.
The result of that formula would then be your home equity loan. It also has little to no credit check since you have collateral, but the best thing about it is that it doesn't have steep interest rates. The only problem is that if you fail to repay the loan, the lender will have a good chance of repossessing your house.
Having bad credit is a lot more common than you think. It's one of the most common problems people have in their financial lives. Luckily, with patience, you can turn your bad credit around to be stellar. However, if you're looking for financial assistance for people with bad credit, there are many ways for financial assistance if you have bad credit.
Just remember to research first and pick the best lender before taking out one of these loans to ensure you're not risking too much. That said, these are your best options if you're looking for a loan with bad credit.