Many people think that bad credit is the one factor that will make your ability to get a personal loan impossible. The general feeling is that the stigma of a bad credit score is the one factor that will lead a lender to automatically reject you. However, more and more lenders are becoming willing to offer a personal loan to those with bad credit under new and really interesting specialized programs.
Bad Credit Comes from Many Different Things
The truth of the matter is that not all people with poor credit started that way. Oftentimes, especially in today’s nasty economic market, there were circumstances far beyond the individual’s control that led to the bad credit. This includes the housing bubble that burst and layoffs that came as a result. Many people are just not at fault for a poor credit score and deserve a second chance to get any loan, but especially personal loans.
The Benefit of Personal Loans
For those with poor credit who are looking towards improving their financial outlook over the long term, personal loans can provide a special form of relief: debt consolidation. These loans are offered as an unsecured loan which means that it is not necessary to offer any collateral as insurance against default. Unsecured personal loans can be given in larger amounts (up to $25,000) and used to consolidate many payments, such as credit cards, into one, easy monthly bill.
How Bad Credit Loans Work
Clearly, there needs to be some sort of catch to this scheme, right? Well, yes and no. It is fully possible to get a personal loan with bad credit, however there are also some compensations that you will need to make in order to do so. These include:
Lower Principle Amounts – depending on the severity of your poor credit, you may only qualify for a personal loan of $5,000 or less to start. However, after responsibly repaying that loan, you can hope to receive more money the next time.
Higher Rates of Interest – poor credit does have consequences, and this is the most famous of them. You will need to pay a higher interest rate on your personal loan than someone with good credit. However, this does not mean that you should pay so much interest that the loan is no longer valuable.
Specialty Lenders for Bad Credit
Unsecured personal loans are offered to people with poor credit every day. However, these loans are not usually found in the traditional places. Instead, online lenders offer the best bet for those interested in finding a bad credit loan without a being charged terribly high interest rates.
The bonus is that these bad credit lenders generally specialize in working with people in similar situations as yours. They understand the barriers set before you and are generally able to use their experience to counsel you on your best moves as you go forward.
Getting a Personal Loan Today
Online lenders operate 24/7 since their “offices” are virtual. That means that you are able to access the programs available and begin to compare rates immediately. Sometimes you can get “automatic quotes” to use as a base measure for comparison.
On a final note, make sure to get quotes from 3-5 different lenders before making any decisions and also complete a thorough background check on any company you consider before divulging personal information such as your social security number. Once you have looked at the lenders available, getting the personal loan you need today, despite poor credit, is easier than you think.