Because of the economic crisis, people are finding it difficult nowadays to obtain financial aid from banks and lending companies.
Most financiers have very tight standards and when you don’t meet the criteria; your loan application will likely be automatically declined.
Often, banks and lending companies offer secured loans which have to have the submission of collateral. If you can’t provide collateral, you may find it even more complicated to get approved for a financial loan.
In fact, in spite of collateral, your loan application may still get declined when you have below average credit history.
Bad Credit and Personal Loans
What if you have bad credit?
What are your chances of getting approved for a personal loan? In reality, the lower your credit score is, the slimmer your chance of getting approved for a loan gets. Your best option is to apply for a secured personal loan for bad credit.
Look for a lending company that does extend personal loans for bad credit.
DO extensive research to make sure that you are dealing with a legitimate and trusted lender. Some lending companies that offer bad credit loans in the market do not have licenses and may actually try to rip you off by imposing excessive rates and fees. Be sure to investigate the lender’s background and track record before even thinking about submitting a loan application.
It’s a good idea to ask the bank where you have an existing savings or checking account whether they can offer you a loan despite your credit history.
Don’t be afraid to speak with your banker. Explain the situation that lead you to bad credit as well as the steps you’ve done to improve your credit history. Politely request if you can be granted a loan with repayment terms that you will be able to keep up with.
Be prepared to submit a security.
If you are home owner, using your home as collateral for your debts will greatly increase your chances of getting a loan despite bad credit. However, you need to be aware of the risks as well. Remember that if you fail to keep up with your loan payments, you could end up losing your property to your lender. To avoid such an unpleasant incident, you should create a repayment plan that you can follow throughout your loan’s repayment term. If you are not a home owner, you can use other valuable assets such as vehicle, lot, jewelry, etc.
In case you come across a lender who is willing to extend you a bad credit personal loan without security, do not sign up the contract right away. Do some investigation first. Check the lender’s background and track record of service. Carefully read and understand the terms and conditions. See to it that you will not be charged with hidden fees. You can expect the rate of interest to be much higher if the loan is unsecured but you should still make sure that the lending company complies with the lending laws of your State.