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Historic. That’s the word a recent Forbes article used to describe the rise of online lending. What’s the reason for this exponential growth? We offer five suggestions as to why borrowers have begun to embrace the online loan.When you have bad credit and no money, everything is an emergency. From a flat tire to a surprise medical procedure, even small struggles can turn into major crises when you can’t afford them.
Don’t panic. There’s an easy solution for your short-term debt problems – a personal loan. You just need to know how to get one.
We’ll show you how to boost your chances to qualify for an unsecured personal loan when you have bad credit. The process is relatively simple, albeit with caveats. When you’re ready to start the process for obtaining a loan, head over to our loan request form.
Before we show you how to get a loan, you should know what types of loans are out there. We help people try to find lenders that offer three different types of loans: Bank Personal, Peer to Peer, and Personal Installment. (We recommend that you try to get the best loan possible, but don’t apply for too many loans. You'll get a credit check every time you apply. Too many credit checks will lower your overall credit score.)
There are other types of personal loans, but we don’t recommend all of them. If you need more than $1,000, then don’t sign up for a cash advance. Most states limit the amount you can apply for with a cash advance anyway. Technically, you could combine several cash advances to reach your loan target amount, but the interest would be overwhelming. We recommend that you stick to the three types of loans listed above.
Note: You also should stay away from secured loans. These are loans that require you to offer collateral, such as your house (home equity loan) or car (auto title loan). If you can’t pay off the loan, you lose whatever you offered against it. It’s better to avoid that risk and instead apply for an unsecured loan.
If you have bad credit, a lender might be more willing to offer you a loan if you have a co-signer. What's a co-signer? It's someone who agrees to pay off your loan for you if you are unable to pay the loan off yourself. This person will need to have excellent credit to make up for your bad credit.
When I purchased my first car, the dealership had a great deal going on: a 1.9-percent interest rate if I financed the car through the company's loan department.
I'd saved up enough to pay in cash, but I wanted to have it financed to boost my credit history.
(Remember, your credit history gets better the more times you prove you can pay off a significant amount of debt, but that's only true if you take the time to pay off the debt. So, if you buy a new car, you should get a loan and make regular payments for at least two-and-a-half years, so it counts as a good credit experience. If you do this, your credit history will get you a lower interest rate when you apply for a mortgage.)
I didn't have any negative marks in my credit history, and my score was pretty high. But I still wasn't qualified for the loan.
They told me that I didn't have enough experience.
The only way I could get the 1.9-percent interest rate was if I had a co-signer. Well, my wife's parents happened to be visiting that weekend, and they had come to the car dealership with me. I didn't want to ask my father-in-law to co-sign, though. I wanted to buy the vehicle on my own.
Still, it made sense to have the car financed. He was willing to co-sign, even though he'd had a bad experience co-signing in the past when he had to pay for the item he'd co-signed, and so we pulled the trigger and got the car financed at the 1.9-percent interest rate.
Chances are if you try hard enough you'll be able to find a co-signer, too.
Lenders are a stubborn bunch. You can trust them to try everything in their power to get you qualified for a loan. You just have to be willing to work with them. Here are some tips for when you're dealing with a lender:
In the case that you find a loan, your lender will offer you a loan agreement. Read over the contract and make sure it includes the price points you expected. Don’t sign it until you have read it thoroughly and agreed with everything in the agreement. You can always call your lender if you have any questions.
The best way to save on your loan is to pay it off as quickly as you can. The sooner you pay off your loan, the less interest you will pay. First, though, make sure there's no penalty for paying back your loan before the due date. If there’s not, you should pay back your loan as fast as you can.
Your lender will set the fees and interest for your loan. These charges can be affected by state regulations and your credit history. There’s not much you can do about your state laws, but you can bump up your credit score. Improving your credit score will also improve the chances that you’ll get the loan in the first place. A recent Forbes article listed several great tips for improving your credit score.
Beware of credit repair companies that promise to improve your credit rating by getting negative information taken from your credit report. Most of the time the bad stuff can’t be removed unless it’s old. According to the Credit Repair Organizations Act, it is illegal for these companies to make false promises or bill you before completing their services.
It's sad, but not all sites that offer “personal loans for bad credit” actually follow through. Here are a few products that won't help you get a personal loan.
Don’t believe the adage, “Beggars can’t be choosers.” You are allowed to search for the best loan for your circumstances. Try to avoid the unsavory ones. The Federal Trade Commission offers tips on how to recognize an advance-fee loan scam.
There are a few basic requirements that you have to meet to be approved for a personal loan with bad credit. They are less strict than you might think. As long as you are at least 18 years old, a U.S. resident with a valid ID and Social Security number can show proof of income and have a bank account; there’s a good chance that you’ll qualify for a personal loan. Of course, we can't guarantee that you will be eligible. We are not a lender, and it's up to the lender to decide how much you'll get or if you'll get anything at all.
You can get a loan with bad credit. But wouldn’t it be nice to have enough credit? You will need to change your spending habits before that happens. Use this loan as an opportunity to improve your credit. You’ll do that if you pay off the loan without missing a payment.
If you are using this loan to treat long-term debt problems, you will need to figure out a different way to address that problem. Taking out more debt is not a good way to get out of debt. We suggest meeting with a debt counselor. They will teach you how to change your spending habits, consolidate your debt, optimize your income, and finally reach financial independence.
You can go from having bad credit to having enough credit.
We hope this article helps you reach your goal of getting a personal loan. We know that having bad credit can be difficult, but hopefully, these tips will help you get the money you need.