Bad credit might look like a handicap when applying for a personal loan. Faulty credit history can be a resultant of many unexpected factors in life. It can be because of accidents, misfortunes, unforeseen circumstances and emergencies.
Having a bad credit score might make the acceptance of personal loans difficult but it doesn’t necessarily make it impossible. So, if you’re looking for easy bad credit personal loans, then this article might help to simplify your worries.
What Is Personal Loan
A personal loan refers to money borrowed for certain purposes like car, home renovations and study abroad etc. The amount borrowed must be repaid with interest over an agreed period of time, which usually spans from 1-7 years.
How To Get The Best Personal Loan
Comparing different personal loans can help you in your research for easy bad credit personal loans or even for a personal loan. However before you start searching the billions of pages on the interest, you need to understand a few factors.
Interest Rate
Interest rates can be either fixed or variable. Loans with a fixed interest rate have a fixed repayment amount that needs to be paid each month.
While loans with variable interest rates don’t have a fixed repayment amount. The repayment amount grew higher along with the increasing interest rate and vice versa.
Your interest rate depends on your credit score and might differ from what was advertised.
Loan Guarantor
Loan guarantor takes on the burden of the loan repayment if you fail to do so. A loan guarantor can be your family or friends. Furthermore, lenders tend to offer low interest rates if loan guarantor is provided.
However, it’s necessary to understand the risks of a guarantor before agreeing upon it.
Loan Security
There are mainly two types of loans, secured and unsecured. In secured loans, you provide your assets as a collateral which the lender can sell or confiscate failing to repay the loan.
However, in an unsecured loan, the element of ‘collateral’ as a whole is eliminated. Instead the interest rates are higher and a loan guarantor is necessary. Furthermore, the lender has the right to sue you if you fail to repay the loan.
Small Personal Loans
Small personal loans are an excellent way to raise capital in an emergency situation despite a bad credit score. These loans are approved quickly, have low interest rates and no processing fee associated with them.
In some cases, small personal loans are offered with no interest at all, depending on the borrower’s credit history.
Can You Apply For Personal Loan Despite Bad Credit
Yes, you can apply and get approved for personal loans despite bad credit. However, you might have to pay a higher interest rate than the capitalistic rates.
It’s also possible that you might need to provide a loan guarantor while applying for bad credit personal loans. This is because borrowers with low credit scores are high risk clients and are likely to fail repaying payments towards loans.
Endnotes
Getting a bad credit personal loan is surely a mammoth task but not impossible. You can always approach certified lenders who offer easy bad credit personal loans. These lenders take the risk to approve loans or provide a different alternative if possible.
Furthermore, make sure that you do thorough research before applying for any personal loans. And you prepare a budget plan beforehand towards the repayment of the loan. If you miss a repayment, the lender charges you a missed payment fee.