The average person has faced more financial challenges now since the 2008 recession. Inflation is booming, energy costs are skyrocketing, and interest rates keep climbing.
On top of that, wages aren’t keeping up. Personal loan balances jumped from $146 billion in 2021 to $192 billion in 2022.
In other words, it’s hard to keep up with basic bills and rents in many areas make housing virtually unaffordable.
Can you get a loan with bad credit?
You’re probably wondering if you’re relying on credit to pay your bills or missed a payment recently.
You’re in the right place to learn about loans with bad credit. Read on to know if you can get a bad credit loan and how to get one.
Can You Get a Loan With Bad Credit?
Most lenders don’t want to lend money to people with bad credit because they assume that the borrower isn’t responsible with money.
They only want to lend money to people who they know will pay back the loan.
If you already have a track record of not paying bills on time or defaulting on loans, it makes it hard to get a loan with bad credit.
There are lenders that will work with people who have bad credit, but they often charge higher interest rates and fees.
You also need to be careful when getting a bad credit loan. Some lenders are predatory, meaning that they’ll take advantage of your bad situation.
They may have strict terms or horrible customer service. They might even try to mislead you.
It’s important to be completely aware of these things because you need to do additional work to find reputable lenders who offer bad credit loans.
Tips to Get a Loan With Bad Credit
Yes, you can get a bad credit loan. To get the best loan with a reputable lender, you should do your homework before signing up for a loan.
Start by checking your financial standing. Pull your credit report and look at your monthly income and expenses.
Ask yourself what the purpose of the loan is. If you need the loan to make ends meet, look at your income and expenses to see if you can trim down expenses or earn more money.
That will help lower the amount of money needed.
If you’re using the loan to consolidate existing debt, look at your current interest rates and how much you pay each month. You’ll be able to figure out if a loan is worth it or not.
You want to pay lower interest rates and lower your monthly payments. That will give you financial breathing room.
Different Types of Loans
Don’t start shopping for loans until you understand the types of loans available.
Loans are either secured or unsecured loans. A secured loan is guaranteed by an asset, such as a home or car.
The most common types of secured loans are mortgages and auto loans. If you default, the bank can take the property used to secure the loan.
An unsecured loan means that the loan isn’t guaranteed by property or an asset. If you default, lenders can impact your credit score and send your account to collections.
There are short-term and long-term loans. These can either be secured or unsecured loans.
Short-term loans are usually for $1,000 or less and get paid back within a month. Some lenders have terms for only two weeks, while others go for a few months.
There are short-term online loans that will give you money right away. Lenders like Kingcash offer loans up to $750.
You need to pay back the loan within 120 days. It’s the type of loan that will help you bridge the gap if you know you have funds on the way and an unexpected expense came up.
Long-term loans are like traditional personal loans. These are loans for $1,000 to as much as $50,000. These loans are mostly unsecured loans.
You pay the loan back in monthly installment payments for three to seven years.
Shop for Lenders
Are you ready to shop for lenders? You’ll want to know what type of loan you need, whether it’s a short-term loan or a long-term loan.
Research lenders online and read reviews. You can get a lot of information from other people. You’ll learn how easy it is to apply, how fast the process takes, and how the customer service is.
You don’t want to start applying for loans with every company you come across. That results in a hard credit check, which will damage your credit report.
Online lenders offer a way to get a loan estimate. It’s a ballpark estimate that uses a soft credit check that doesn’t impact your credit score.
You’ll enter general information, such as your name, income, address, and social security number. You’ll learn how much you can borrow and the interest rate.
Compare Loan Terms
By this point, you should have a few lenders to work with. Look at the loan terms that they offer.
Compare the monthly payment, fees, interest rate, and length of the loan. You need to look at the total cost of the loan rather than just the monthly payment.
You could get a loan with low monthly payments, but you’re stuck with that loan for years. It could end up costing much more than another type of loan.
Once you decide on a loan and lender, fill out the formal application. Most online lenders approve loans within a couple of days and you’ll get your funds quickly.
Borrow Money With Bad Credit
Can you get a loan with bad credit? Yes, you can. It’s possible thanks to online lenders. Before you apply for a loan, you do need to know the different types of loans and what your financial needs are.
You’ll find the right loan and reputable lender in no time at all. For more financial help, click on the Finance tab at the top of this page.