Best Of A Bad Situation: Poor Credit Loans

When a person has poor credit, life can get a lot harder

. Interest rates go up, banks suddenly stop issuing credit cards, and leasing a house or a car can be nearly impossible. Still, for those in need of cash, or for those looking to repair their ailing credit score, options do exist, and they're called poor credit loans.

Poor credit loans are not the same as bad credit loans. Bad credit loans are a particular species of loan that exist to provide for those with bad credit. Poor credit loans, on the other hand, encompass all types of loans that are taken out by borrowers with financial trouble, and can include bad credit loans, but are not limited to them.

One option for a poor credit loan is that of the bad credit loan. The advantage is that one can "go it alone," not needing a cosigner or collateral. However, the trade-off is that the interest rate is higher and the repayment parameters are stricter than a mainstream bank loan. The other option is to take out a loan with a bank, and offer collateral or find a cosigner. The interest rates are lower than with a bad credit loan, and it is easier to apply for forbearance or deferment. However, this means that to get the loan, a person must risk losing whatever they offered as collateral, or find someone who is willing to take responsibility for the loan if things go wrong.

Regardless of which method a borrower chooses, poor credit loans can be immeasurably helpful in dealing with credit problems. For one, such loans offer financial aid to people who otherwise could not get it when its needed. Another benefit is that the successful repayment of a poor credit loan can repair credit quite a bit, and its as simple as using the principal amount to make payments on the loan, with only the interest coming out of the borrower's pocket.

by: Emily Retherford

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