Is it possible to get a loan if you have bad credit? You might be the kind of person who made mistakes or had some bad luck in the past, but now you want to turn things around. The good news is that you have some options when it comes to getting a loan. The bad news is that you’re not going to get the lender’s best interest rate no matter what you do. Here, we look at the four most popular loans for people with bad credit in order of advisability.
Debt Consolidation Loans: This is your best bet for getting existing debt back under control. Most business that offer to settle your debt will usually combine this with debt consolidation. The whole point of debt consolidation, though, is so that you’re only making payments to one creditor, who might even be able to offer a slightly better interest rate than credit cards offer.
Bad Credit Personal Loans: You may have already paid off your credit cards but you still have bills to pay and not enough left in your paycheck to cover them. Additionally there are also Unsecured Personal Loans that are designed for people who need extra money to pay those bills or want to make a large purchase but don’t want to get sucked into the credit card trap again.
Car Title Loans: This is pretty straightforward and pretty much like pawning your car to get a loan. You give the lenders the car title and they give you a loan. When you pay off the loan, they give you the car title back, but if you don’t, they get the car. This is one kind of loan for people with bad credit that you want to be very careful with because they might tack on fees and high interest rates that make it very difficult to pay off the loan.
Payday Loans: This kind of loan was meant to give you the extra money you might need to get through to your next paycheck, but it also has a bad reputation due to disreputable lenders who make it very difficult to break the debt cycle so you keep coming back for more. This type of bad credit loan, however, is a good option for people who just need a small amount of cash for a temporary cash shortage. The thing to remember is that it is best to pay the full amount due on or before the due date.
The best way to avoid needing any of these poor credit loans is to simply avoid getting yourself into a situation where you need them. However, if the damage has already been done, you have bad credit and you need a loan now, you should opt for a debt consolidation plan or a Fast Cash Loan to get you through it.
You may also wish to take advantage of the free credit reports that the federal government requires credit agencies to provide upon request for free once a year so that you can dispute any errors that might be damaging your credit. You should also make loan payments on time without excuses and pay off balances in full whenever possible to help improve your credit score. A debt consolidation loan and/or taking advantage of debt settlement services may be your best bet if making monthly payments on all the debts you owe is difficult on your budget. If you have any credit accounts, keep them open to avoid unintentionally damaging your credit score, but use them sparingly to avoid falling back into the credit trap.
A bad credit personal loan is another good pick for building your credit when you’ve got most of your existing debt paid off and want to start rebuilding your credit. Make sure you actually need the money, though, because you don’t want to pay interest rates that are probably going to be fairly high for no good reason. A lot of people use these loans to make home improvements or needed home maintenance that they might have neglected while worrying about how they were going to pay the bills every month.
There’s not much to say about car title loans and payday loans except these should be your last choice and only used in situations where you need the extra money this month but you have a reasonable expectation of increasing your income level to the point where you don’t need them and you know you’ll be able to pay the loan off.
Loans for people with bad credit will rarely give those people the best interest rates and they may get a lot of rejection notices before they actually find a lender that is willing to take a chance on them. However, options do exist and you may find an option that works for you.