Life comes at you fast, and regardless of your credit history, there may come a time when you need an emergency loan. Although you may have a bad credit history, not all is lost. Thanks to bad credit loans and cash advances, you can receive money when you most need it.
Bad Credit Personal Loans
Bad credit loans are perfect for you if you have either poor credit or have recently suffered bankruptcy or repossession. Personal loans for bad credit are useful if you need money for a car purchase, home renovations, an upcoming wedding, or another major event which requires short-term funds. The loans generally range from between $700 and $20,000 and do not require collateral to pledge against the loan.
On the plus side to bad credit loans, they offer you an opportunity to improve your credit record by consolidating all debts and paying them off. By making regular on-time payments, this will also help restore your credibility. Although bad credit personal loans can help you rebuild your credit ratings, there are downsides to these loans.
For starters, you need to expect higher interest rates with these bad credit loans than with other loans. Without collateral required for the lender, you are associated as a riskier borrower, which ups the interest. Also, if you have any doubt about your ability to repay the bad credit loan, do not take it. It can make your credit rating worse by not repaying it and make it harder for you to borrow money again in the future.
When looking for a bad credit loan, make sure you compare loan quotes in order to find the best loan rate for your situation. Be sure to bring the proper paperwork and documentations with you when applying for a bad credit loan: asset and liability statements, proof of residence, an identity card, and your credit history. There are two main locations where you can apply for a bad personal credit loan: banks and credit unions.
Bad Credit Loans with Banks
Although banks do not often give loans to people with bad credit, they do provide options. Banks sometimes give credit cards to customers with bad credit since credit cards have a higher interest rate than the interest rates on the bad credit loans. The disadvantage to applying for a loan at the bank is that the loan generally has to be at least $1,000. This can be troublesome if you are looking for a smaller loan.
Bad Credit Loans with Credit Unions
Credit unions offer more options than banks for receiving a bad credit loan in a smaller amount. Many credit unions approve bad credit loans by completing a partial credit check. Although the interest rates for loans from a credit union are lower than those at banks, in order to acquire a bad credit loan, you need to have either a checking or a savings account in that specific credit union’s branch. Another downside to applying for a bad credit loan at a credit union is that they are not commonplace and may be far from your home.
Cash Advances & Payday Loans
Cash advances, also referred to as payday loans, can provide you with an unsecured and short-term cash advance until your payday. These loans occur in small amounts-ranging from $100 and $500-and must be repaid once you receive your paycheck. Cash advances can be useful if you are facing a financial emergency, but should not be used for an everyday loan due to the high interest rate. Cash advances have the highest interest rates out of all bad credit loans, with rates ranging from 300% to nearly 800% APR. This interest rate equates to approximately $15 for each $100 lent.
Before receiving your loan and loan agreement, you must file an application form with a private lender. When filling out the application, you need to include relevant payday information, including the next payday’s date, the amount of cash due, and copies of recent bank statement. In order to qualify for a cash advance loan, you need to have a current job of at least three months with an annual salary of at least $12,000 after taxes, and be a legal citizen of the US.
Even though emergencies may happen while you have bad credit, be sure to weigh the costs of all options before committing to a bad credit loan or cash advance. Understand that these loans have the highest interest rates, and missing payments may result in the borrower being unable to take out another loan.
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