As
a person with bad credit, trying to find an unsecured loan in this
tough economy likely seems impossible. Many people with bad credit have
already talked to their personal banks about the possibilities of such
loans only to find out that they are disqualified. In truth, unsecured
loans for persons with bad credit are still available. However, they are
generally not given by traditional local banks. Instead, looking at the
online marketplace will provide a great alternative and many different
choices.
An Overview of Unsecured Loans
With
bad credit, your choices for loans are the same as the choices for
people with good credit scores. Basically, you can opt for a secured
loan or an unsecured loan. Secured loans are actually easier to acquire
with bad credit since they are attached to some sort of property that
has value - usually a home or vehicle. With a secured loan, bad credit
is less of an issue since the value of your property assures the lender
that he will have something to gain if you fail in your loan's
repayment.
Unsecured loans carry no such guarantee for a lender.
They are called unsecured because they do not come with any sort of
security or collateral for the lender. Therefore, it is only your
signature that binds you to this loan. Failure to repay an unsecured
loan is merely a loss to the lender, so he will be more suspicious of a
person with poor credit.
Alternatives Available for Bad Credit
If
you have poor credit, there are several unsecured loan options
available. You need to evaluate each of these options in order to
determine which is best for your financial situation and needs. However,
each of these options has its downsides as well, so pay attention.
Option #1: Traditional Loans
Depending
on the situation that led to your bad credit, you may still be able to
qualify for a traditional unsecured loan. These loans carry long terms
and higher principle amounts. However, chances are that you will need to
find a cosigner for such loans. The cosigner must have the income and
credit necessary to qualify for the loan and be willing to sign his or
her name onto the loan and assume responsibility for it should you fail
in your repayment.
Option #2: Cash Advances
Cash
advance loans, which are also known as payday loans, will not require a
cosigner because they also do not require a credit check. These loans
are given for a short period, generally 2 weeks to a month, and only for
small amounts. You can usually get anywhere from $100-$1,500 from a
cash advance. You will also be charged a pretty high interest rate on
these loans since their short terms preclude the accumulation of too
much interest (i.e. profit for the lender).
Option #3: Unsecured Credit Card
Persons
with poor credit may think that the concept of a credit card is off the
table for them. However, unsecured credit cards are still issued to
people who have less-than-perfect credit scores. The hitch here is that
the credit line will usually be pretty low to start out ($500-$1,000).
You will also generally pay top interest on any of your credit card
purchases. However, if you do not need that much money and feel as
though you can budget enough to repay the card within a few months, this
is a very flexible option. Overtime, with responsible repayment, you
can also request higher credit lines and lower interest.
Getting Money with Bad Credit
Unsecured
loans are still not easy to acquire for persons with bad credit.
However, they do exist in three distinct forms. Read through all of
these options before deciding which is best for you and your needs.ght!
0 comments:
Post a Comment