subject: Loans For Consumers With Bad Credit Explained [print this page] Anyone with a bad line of credit will agree that getting a loan can be a trying process. But for those with a poor credit score, there are options to get a loan with fair rates regardless of the line of credit one may have. Special terms may apply, but there are solutions nonetheless.
Payday loans are a common gateway to the loan industry for anyone with a sub-par credit history. Payday loans are famous for their practices in predatory lending, however, and consumers should keep a keen eye on any lender offering them. They don't typically offer much, and interest rates are incredibly high. It isn't uncommon to pay ten times as much in interest as a normal loan would entail. Because of this, payday loans should usually only be a last resort.
Secured loans are a bit better of an idea for borrowers with poor credit. Secured loans actually require that the consumer has something of value, however. This can be a car or a home- and in some cases, even proof of responsibility in paying one's rent can be act somewhat as a type of security. In any case, consumers benefit from the secured loans as they are less of a risk in the lender's eyes.
Charismatic personalities can sometimes talk their way into a loan, even with the history of bad credit. As long as a proper plan is drawn up, it remains concise, and details one's budget and repayment plan, lenders will sometimes put more trust into the borrower. This option doesn't work for everyone, as it requires a motivated personality and the ability to influence others- as well as proper negotiation tactics. Borrowers will find that these characteristics will take them a long way in the finance industry.
If borrowers own a mailbox or some form of mailing address, they probably are already familiar with preapproved credit cards and other forms of loans. It's not hard to get multiple offers each week- but instead of trashing the offers instantly, take the time to look through a few to see the offers each credit card entails. Some lenders are designed especially for catering to borrowers with poor credit, and some offers are literally too good to pass up. Be on the lookout for scams and hidden fees or predatory lending, however, as these can be all too common in the industry.
Family and friends are quite valuable in the situation of poor credit. Lenders will accept loan applications that are backed by others with good credit scores. In the event of the loan defaulting, the one who signed for the person will be responsible for paying the debts. Therefore, lenders get less risk and borrowers get decent interest rates and options in loans.
Final Thoughts
The financial industry is more lenient to those with bad credit than most would think. This is especially true in the case of lending institutions that allow bad credit loans to be offered on a constant basis. As borrowers will find, lenders are just as eager to give out a loan as borrowers are to obtain one. Knowing how to negotiate and how to be charismatic can mean all the difference in the process.
