Getting a loan with bad credit is like having seawater delivered to your sinking boat. People with bad credit do not need more debt, and they certainly do not need debt that will charge them almost 100% of what they are borrowing. If you are getting the loan in order to make ends meet, then ask yourself how you are going to make ends meet next month when you have your current bills and your new debt bills.
There Are Personal Loan Companies For People With Bad Credit
If you want a loan and you have bad credit, then there are loan companies that specialize in such things. It is as simple as applying and getting your loan–there is nothing extra to it. So long as you have had a job for the last six months and there is nothing too sketchy on your history recently, such as signs of fraud or identity theft, then you will probably get your loan.
It is really as simple as that. There are companies out there that will give you a loan even if your credit score is terrible, even if you have had collections, have had judgments against you, and even if you have been delinquent in your payments.
There Is The Option Of Credit Cards
Before you consider a consolidation loan, have you considered credit cards? They are probably the hardest type of debt to get out of, but they also have better interest rates than the rates that a bad-credit company will offer you.
Consider Waiting Six Months To Rebuild Your Credit
If you wait six months and keep your credit rating clean, then you stand a better chance of getting a loan from another company besides a bad credit company.
Can You Secure The Loan With Your Car Or House?
If you have a big asset such as a car or a house, can you get a secured loan? With that in mind, if you have bad credit and you are looking for a loan; do you really want to risk your house or car? If it seems that money matters are not going your way, would you really want to risk your house or car in the hope that your money troubles will get better?
What About A Credit Union Or Peer-to-Peer Company?
There are a few peer-to-peer companies that may offer you loans if they are consolidation loans. If you are on the verge of having an okay credit rating and having a sub-prime credit rating, then you may be able to get a loan with a peer-to-peer company for a reasonable rate rather than a devastatingly high rate. You may try Prosper, Lending Club, Peerform
Borrow From Family Or Friends
Instead of using a bad credit company, you could ask one of your family or friends if they may lend you the money. If they will not, then ask if they will be co-signers on your loan or a loan guarantor. If your friend or family member has a good credit rating, then it may increase your chances of getting your loan with a decent APR rate.
Advantage Of A Loan With Bad Credit
They actually give you a loan, which is something that other lenders will not do. If you need money and you have bad credit, then getting a loan may pull you out of the trouble you are in. If you are taking out the loan to pay bills, then you may be digging yourself into a deeper hole.
Another good thing about getting a loan with bad credit is that you may rebuild your credit rating with your loan. If you have no loans at all, then it is a little trickier to rebuild your credit. If you have a bad credit loan, and you make all the payments without missing any, then you may rebuild your credit score.
If you are using the personal loan to consolidate your debts, then it may help you a great deal. It may be able to turn numerous debts into one debt. If this also means that your monthly outgoings are reduced, then it may help you keep to your monthly budget.
Disadvantage Of A Loan With Bad Credit
Loans for people with bad credit will often have terribly high APR rates and often have the ugliest repayment terms. It is almost as if they want the person with poor credit to fail. One wonders why such companies would seemingly help people to fail. The reasons are not as obvious as they first seem.
On the one hand, they are taking a bigger risk when they give money to people with a poor credit score, so it stands to reason that they would want to make more money to compensate for the risk.
On the other hand, the second reason is that they have to put some sort of hurdle in front of their loans. After all, if they are giving money out to people with poor credit, then they are pretty much giving money out to anybody, which is a bad business model for any lending business. At least if they have a high interest rate, then it scares off a few people and makes them think before taking the loan.
Bad Credit Loan Companies Offer Unsecured Loans
Typically, most bad credit loan companies are offering unsecured loans. They protect themselves with bigger interest rates and by only offer lower amounts of money. They have no claim to your house or your assets, but they will probably send collections agents around to your house if you do not pay your monthly installments and they manage to get a judgment on you.
If your do get a secured loan, then your house is at risk if you are unable to repay the loan on time and as per the loan company’s terms and conditions. Remember that companies that offer high-interest loans to people with bad credit will typically dictate the terms and conditions. One of the most common is how much you may borrow and how quickly you have to pay it back. If you are expecting a long repayment schedule…then think again.
Conclusion – Don’t Get A Loan With Bad Credit
Bad credit loans such. They suck. They suck big style!
Loans for people with bad credit are designed to hurt (not literally of course). People with bad credit do not need that sort of trouble. The only justification for a loan with bad credit is if your current debt payments are too much and your bad credit loan is a consolidation loan that will lower your monthly outgoings. Even if that is the case, the amount of money the company asks you to pay back is so much that you simply have to find another way. Bad credit loans are almost always not worth your time or money. They are for the truly desperate, and if you can hold off and build your credit rating for six months, then do that and get a loan with another company instead of getting a loan with bad credit.