Get Loan With Bad Credit

It is possible for a person with a record of bad credit to get a loan if they are willing to look around and do some extra work.

Many lenders are willing to make loans to people with bad credit. People with bad credit should be willing to pay higher interest rates when they take out a loan. They should also be willing to face stricter terms on loans because of bad credit.

Quick decision for bad credit online loans

A good place to look for a loan for people with bad credit is online. There are large numbers of online lenders including many nontraditional lenders who are willing to loan money to people with bad credit.

Most of these lenders will only lend to those who can demonstrate that they have a reliable source of income such as a job, a pension, a business with cash flow or a government benefit payment. Most of these lenders will require the borrower to sign an agreement that specifies how they will repay the loan.

Secured loans

Many lenders will loan to people with bad credit if they put up collateral for a secured loan. In a secured loan the lender takes the collateral if the borrower defaults on the loan. People with bad credit are able to get secured loans because the use of collateral takes away the risk of lending to such a person.

Examples of secured loans are loans from the pawn broker, real estate loans and home equity loans.

Unsecured loans

An unsecured loan is a loan in which collateral is involved. Instead the lender bases the loan decision on a person’s ability or willingness to make loan payments in the future. Many lenders won’t make unsecured loans to people who have a history of defaulting on loans or late payments on loans.  This is why persons with bad credit have a hard time getting unsecured loans. Examples of unsecured loans include bank loans and credit cards.

Lenders will make unsecured loans to people with bad credit if they agree to higher interest and stricter terms. Many lenders will insist on automatic repayment such as an automatic payment taken out of a bank account each month as a condition for an unsecured loan with bad credit.

Credit records

Lenders will make unsecured loans to people with bad credit because a credit record is not a record of income. A credit record simply shows how good a person is at paying their debts. A person with a high income can have a bad record if they have a lot of unpaid debts or late payments in their record. A person with no income can have a great credit record because they’ve never defaulted on a loan or had a late payment. A bad credit record is usually no barrier to borrowing money if a person can verify their income.