5 Tips When Applying for Online Personal Loans with Guaranteed Approval
Loan applications typically require the loan applicant to have a good to excellent credit score. Having better credit qualifies you for speedy loan approval and advantageous rates. If your credit is below average, on the other hand, you’ll find it hard to obtain regular loans. It’s the reason why people with poor credit scores apply for bad credit loans.
Lenders who offer bad credit loans, also known as high risk loans for poor credit, are not so strict when it comes to your credit score. There’s also the possibility of receiving the funds you need fast, making such loans a good option for financial emergencies.
However, there are some risks that come with bad credit loans. So, you better read these tips to make sure that you pick the best one for your financial situation.
Check Your Finances
Don’t forget to audit your finances before you submit a loan application to the lender. Checking your finances allows you to know the monthly payment you can afford for the loan. You need to understand that bad credit loans usually have higher interest rates than regular loans.
Moreover, auditing your finances involves looking at your monthly expenses. If you know your expenses every month, you can prevent taking out an expensive loan that negatively affects your wants and needs. Taking a careful examination of your finances also helps you figure out the type of bad credit loan that’s right for your situation.
If you need a small sum of cash for the short term, you can opt for payday loans. Payday loans have repayment periods lasting two weeks or a month, but they come with higher annual percentage rates. If you want a long repayment period, you can go for online personal loans, with repayment terms of three to five years.
Know About Bad Credit Loans Online
There are plenty of articles online that talk about loan types intended for people with poor credit scores. In fact, you can find lenders that offer bad credit loans online, which means you can apply for it without going to the lender’s office and get your money via direct deposit into your account.
Just search through the world wide web to find different types of loans for people with poor credit. Make sure to pick one that you can afford to pay back, and then fill out the online application form that you find on the lender’s website.
Understand the Disadvantages
You need to understand that loans for borrowers with bad credit have risks and disadvantages. For instance, these loan types commonly have higher annual percentage rates. Besides the exorbitant interest rates, they also come with origination fees and prepayment and late payment charges.
Since bad credit loans are mostly under the category of unsecured loans, you’ll need to have a decent monthly income to qualify for one. You also have to expect that your lender will require you to provide your bank statements and request for verification of deposits from your bank.
Most creditors of bad credit loans also require authorization from you to draft from your bank account for your debt payments. You can give your authorization via phone call or written confirmation. Without your authorization, your lender can’t withdraw money from your account since it’s a violation of the law.
Don’t forget to read the fine print to ensure that you know the ins and outs of your loan. In this way, you’ll also figure out the risks and disadvantages associated with it.
Look for a Co-Signer
One of the ways to get a loan for bad credit is to have someone to co-sign with your loan. You can ask a family member or friend to be your co-signer. Make sure that he/she has a good credit score to increase your possibility of borrowing the cash you need.
Your co-signer must understand his/her responsibilities of being in this position. For instance, he/she should know that the burden of repaying the loan will be on her/him if you, the borrower, fails to pay back what you owe. If your co-signer doesn’t live up to this responsibility, his/her credit score will get dragged down.
Also, you should see to it that this kind of situation shouldn’t take place by paying your loan in full and on time.
Fix Your Credit
If you’re averse to the high-interest rate of a bad credit loan, you can fix your credit first and apply for a regular loan with a lower interest rate. You should pay your bills and debts on time, lower your credit utilization ratio, have a better credit mix, and dispute any inaccuracies in your credit reports to improve your credit.
Takeaway
Now you know about bad credit loans. Such loan types are good options for borrowers with low credit scores. However, these loans can have expensive interest rates and ancillary charges. If you need to borrow money while having a bad credit score, take note of the tips mentioned in this post.