Being in a situation where your credit score is good for nothing is indeed challenging. Getting a loan with a bad credit history is expensive, and there are chances that you can’t even get the financing you need. The question is: is there a loan that you can obtain for your financial situation?
Yes, of course. In fact, there are four loan options for people like you who have below-average credit scores. Just scour the internet or shop around for lenders that can let you borrow an amount of cash for your important expenses.
Make sure to pick a loan with a favorable repayment term and interest rate from a trusted lender. So, without further ado, I introduce to you the top loan options for bad credit.
Online Payday Loans
A payday loan is a form of short-term financing that you have to repay via your paycheck. Most online lenders that provide this type of loan perform soft credit checks on borrowers. So, it can be a good recourse to those who are first-timers when it comes to taking out a loan and those with bad credit scores.
Since a payday loan only lasts for a short period (say, two weeks), this may not be an excellent financing option if you’re going to borrow a large sum of cash. Also, this loan option may be costly because every $100 you borrow comes with a $15 fee.
One of the advantages of online payday loans for bad credit is that they are easy to obtain. There are borrowing caps so that it won’t be difficult for you to repay the loan. Just beware of online lenders that victimize unsuspecting borrowers by luring them into a debt trap.
Online Installment Loans
One of the best features of an online installment loan is that it has a no-hassle application process. Since the application is done online, it spares you from going to the lender’s office to apply for the loan. All you need is an internet connection, a computer or mobile device, and the necessary documents in electronic form.
Moreover, people opt for this type of financing because repayment is easy to manage. If you get approved for an installment loan, the loan amount and interest are spread over the loan’s term. Once a month, you pay a portion of what you owe until it’s completely paid off. Here is an article about installment loans online to guide you through.
Installment loans are a pretty common form of financing. Mortgages, car loans, personal loans, and student loans fall under installment loans. Traditional lenders like banks and credit unions are strict with credit checks, but if you go to an online lender, there’s a chance that you can obtain an approval despite your bad credit score.
Interest rates and fees may vary by state and lender. Suppose you’re applying for an installment loan while your credit is not good, you can expect to pay a higher interest rate. But, compared to online payday loans, online installment loans have lower rates of interest. You can also choose between a fixed and a variable interest rate.
Online lenders that offer installment loans with soft credit checks will still look at your employment status and monthly income. Through this assessment, your online lender can determine your capacity to repay the loan.
Pawn Shop Loans
Going to a pawn shop is among the quickest ways to borrow some cash. All you need to do is bring an item that has value and use it as collateral for the money you borrow.
The funds you can secure if you opt for a pawn shop loan will depend on how much your item is worth. If you want to obtain a higher cash sum, make sure to put a highly valuable material as security for your loan.
Interest rates and repayment terms may vary by pawnshop or state. Don’t forget to check the state laws regarding the regulations on pawnshop loans to determine the appropriate cost of such type of financing.
Title Loans
A title loan is a type of financing that requires the borrower to put up his/her car title as collateral for the sum of cash he/she borrows.
Since it’s a secured loan, you can obtain large cash through a title loan. You should make sure to repay the loan on time. Otherwise, your lender may seize your car. According to a study, 1 in 5 title loans resulted in borrowers’ losing their cars due to failure to pay back the loan.
Takeaway
Nowadays, you can borrow some cash even if your credit score is below average. Just look for lenders that perform soft or no credit checks and try your luck to get approval. Among the best loans for bad credit that you can avail today are online payday loans, online installment loans, title loans, and pawnshop loans.
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