Alternative loans if you have bad credit


Loans for bad credit are designed for people who have less than stellar credit scores or who have little to no credit history. However, even if they are still eligible for a loan, this does not mean that they are not subject to interest rates and repayment conditions. It’s the contrary.

Since they have little or no credit history or have bad credit scores, lenders will give them loans with a higher interest rate and a lower borrowing limit. You might think that’s unfair, but it’s not.

For lenders, people who are at the bottom of the scale in terms of credit score have a higher chance of default, which is why they outweigh the risks with a higher interest rate and a limit. lower borrowing.

What is bad credit?

Having bad credit means that lenders and other financial institutions view you negatively as a borrower. With this negative view, you will find it harder to find a conventional loan, or if you manage to find one, it will most likely have a higher interest rate and a lower borrowing limit.

However, you should note that each company or financial institution has different ways of evaluating you as a borrower. That said, you can get an idea of ​​how different companies might rate your credit report.

For example, if your credit rating is low, you need to consider several reasons:

  • Late payments
  • County Court Judgments
  • IVA, DMP or DRO
  • Difficult searches
  • Default values
  • Bankruptcy
  • Little or no credit history

Fortunately, many financial institutions and lenders are willing to let you borrow a loan even if you have bad credit. They offer loans for bad credit or loans that are not in the traditional sense.

Here are a few:

Online loans

Online loans have been around for a while. That said, if you want to take out a loan without setting foot in a bank, then online loans are for you. You can get them from online lenders. Luckily, there are plenty floating around the internet.

There are many good choices out there, but of course, since this is the internet, there are a few bad apples. Do not worry, because these cases are in the minority.

So how do they work?

They work much like a traditional loan, with a few caveats. First, the application is quick and easy to understand, and the approval is also quick so you can get the money within days – some even on the same day. Not only that, but they can also be negotiated with, especially if you know the lender personally.

Some online lenders even accept cashiers checks or money orders for your monthly payments, especially CreditNinja. If you are wondering what is the difference between the two, CreditNinja teaches us the difference between a money order and a cashier’s check.

Cash advance

If you need a not-so-huge amount of money quickly, you should try a cash advance. A cash advance is a short-term loan from the bank or other lender. If you have a credit card, you can also get a cash advance with your credit card balance. However, cash advances can have high rates and processing fees, but you should consider cash advances if you want quick approval.

A credit card cash advance is one of the most popular types of cash advances. If you already have a credit card, you don’t need to get approval from your bank or lender. Just submit an application and pay the fee.

Once you are done with both, the lender will return the money to you by check or through the ATM. However, as mentioned earlier, they are quite expensive. The interest rate is usually 24%, which is 9% higher for regular cash purchases. Also, interest would accrue fairly quickly and there is no grace period.

Not only that, but the cash advance would hold a separate balance from your credit card balance. Fortunately, you can pay for both via the same online payment. Typically, credit card cash advances don’t have promotions like interest-free or low-interest introductory offers. But, on the other hand, they are still quick and easy to get.

credit unions

Credit unions are community finance organizations run by and for their members. Usually the membership would cost a bit but you can enjoy some of its features like its loan offers. Typically, credit unions accumulate money through their members which they offer to repay as a loan.

Fortunately, if you have already been a member for some time, you can take out a loan. The interest rate is not too high and there are also no fees or penalties. The repayment term of most loans can even be up to 10 years.

Final Thoughts

If you have bad credit or have little or no credit history, you shouldn’t give up hope. There are many financial institutions that can help you financially. Sure, they may offer you a loan with a higher interest rate and a lower borrowing limit, but you can always negotiate with them and come up with reasonably better terms. You just have to find a lender who is willing to listen.

Darcy J. Skinner